To ensure fair competition in the cloud computing market, British media regulator Ofcom has requested an antitrust investigation by the Competition and Markets Authority (CMA) into the dominance of US tech giants Amazon and Microsoft in the UK. Ofcom’s study revealed concerns about the challenges faced by UK businesses in switching between and using multiple cloud suppliers. Amazon Web Services (AWS) and Microsoft jointly held a market share of 70% to 80% in the UK public cloud infrastructure services market in 2022, prompting the need for an independent investigation to determine potential adverse effects on competition.
The CMA’s investigation will examine fees, technical barriers, and deep discounts employed by companies like Microsoft and Amazon to prevent customers from changing cloud providers. This scrutiny follows concerns raised by UK businesses regarding the difficulty of switching or combining cloud service providers. According to CMA boss Sarah Cardell, the cloud infrastructure services market, valued at £7.5 billion, plays a crucial role in supporting various online services, making effective competition essential. The investigation will assess the impact of market practices on competition and determine whether corrective actions are necessary to benefit business customers relying on cloud services.
Microsoft, a key player in the cloud services market, is already under the regulatory spotlight due to its proposed $68.7 billion Activision Blizzard acquisition. Ofcom’s referral to the CMA reflects a broader industry concern about the influence of major tech companies and their potential impact on competition in the cloud market. The investigation aims to address issues related to pricing strategies, technical barriers, and software licensing practices to ensure a level playing field and encourage fair competition among cloud service providers.
As cloud services continue to underpin various online services, from social media to AI foundation models, regulatory bodies emphasize the importance of maintaining a competitive landscape in this rapidly growing market. The investigation’s outcomes will shape future regulations and practices within the cloud computing industry, impacting significant players like Microsoft and Amazon and promoting fair competition for businesses relying on cloud services.
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