Amazon & Microsoft face investigation over cloud dominance

Amazon Logo New

Amazon and Microsoft are facing a new antitrust investigation in the UK. The nation’s media regulator Ofcom, aka Office of Communications, has concerns that the two companies are dominating its cloud computing market. Their dominance is stifling competition, leading to fewer options for consumers.

The UK media regulator to probe Amazon and Microsoft’s cloud dominance

According to Ofcom, Amazon and Microsoft’s cloud computing solutions make up 70-80 percent of the UK’s total cloud market. The regulator last reported that figure at 60-70 percent in its preliminary findings in April. This suggests the two companies are growing their market share, while competitors struggle to survive. Their closest rival is Google with a market share of 5-10 percent.

Ofcom says that the lack of competition in the nation’s cloud market is affecting consumers. They have fewer options and can’t switch freely without facing severe issues. “High fees for transferring data out, committed spend discounts, and technical restrictions are making it difficult for business customers to switch cloud providers or use multiple providers,” the regulator said in a press release.

After a thorough study of the UK’s cloud market over the past year, where it evaluated the current market trend and future growth scope, Ofcom determined that the strength of the competition, or its lack thereof, could limit innovation and growth in the sector, estimated to be worth up to £7.5 billion in 2022. “If left unchecked, competition could deteriorate in a critical digital market for the UK economy,” it said.

The investigation is already underway

Ofcom submitted its findings to the UK’s Competition and Markets Authority (CMA), recommending further investigation into the matter. The CMA has also promptly begun an investigation following the referral. “The CMA is launching a market investigation into the supply of public cloud infrastructure services in the UK,” it said in a press release.

An independent investigation from the Authority will determine whether Ofcom’s competition concerns in the cloud market have a strong base. The CMA has established an inquiry group and appointed independent panel members for the investigation. If they determine competition issues, the CMA may come up with new rules to regulate the market. The Authority expects to complete its investigation by April 2025.

“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny. This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models,” said CMA CEO Sarah Cardell. “The CMA’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and if not, what action should be taken to address any issues it finds.”