UK Regulator Calls for Antitrust Investigation into Amazon and Microsoft’s Cloud Dominance

UK's media regulator, Ofcom, has formally requested an antitrust investigation into the dominance of US tech giants Amazon and Microsoft.

This move comes as Ofcom identified certain features that limit UK businesses looking to utilize multiple cloud providers effectively. The investigation aims to determine if their dominance adversely affects competition.

Market Landscape: Amazon and Microsoft's Cloud Dominance

As of 2022, Amazon Web Services (AWS) and Microsoft held about 70-80% of the UK's public cloud infrastructure services market.This made them the dominant players in the sector. In contrast, Google emerged as their closest competitor, securing only a 5-10% market share.

This significant market share raised concerns about competition and the potential implications of such dominance on the broader cloud ecosystem.

As a result, OFAM has directed the Competition and Markets Authority (CMA) to independently investigate the firms to assess how their dominance affects competition.

Meanwhile, Amazon and Microsoft have responded to Ofcom's call for an investigation, albeit with differing stances. Amazon strongly disagreed with Ofcom's findings, asserting that the regulator misunderstood how the IT sector operates and the services offered.

Also, Amazon voiced concerns that unwarranted intervention could inadvertently harm IT customers and disrupt the competitive landscape. Nevertheless, the tech giant committed to cooperating with the CMA during the investigation.

In contrast, Microsoft conveyed its dedication to ensuring the UK cloud industry remains innovative and highly competitive. Furthermore, a Microsoft spokesperson affirmed their willingness to cooperate with the CMA throughout the investigative process.

Notably, Ofcom's decision to seek an antitrust investigation into Amazon and Microsoft's cloud dominance stems from concerns raised in April. These concerns were regarding the practices of these tech giants due to their substantial market positions.

UK businesses expressed apprehensions about the difficulty of switching or integrating multiple cloud providers effectively, prompting Ofcom's referral to the CMA.Ofcom Director Fergal Farragher stressed the need to ensure a competitive and fair environment for business customers using cloud services.

Implications Beyond the UK: International Regulatory Attention

Meanwhile, the issue of cloud computing dominance has garnered attention beyond the UK's borders. In France, the antitrust authority expressed concerns about various practices within the sector that could potentially restrict competition in June. They also hint at possible investigations in the future.

Furthermore, European Union (EU) antitrust regulators scrutinize Microsoft's cloud computing practices. This move is in response to the trade group Cloud Infrastructure Services Providers in Europe (CISPE) complaint.

Also, Google Vice President Amit Zavery highlighted the need to create an open cloud market that minimizes vendor lock-in. He stressed the importance of flexibility for the UK government, businesses, and consumers to transition between cloud platforms and select tailored services.

The CMA aims to complete its investigation into Amazon and Microsoft's cloud dominance by April 2025. This extension will allow ample time for a comprehensive assessment of its market position and impact on competition.

As the investigation proceeds, it will offer valuable insights into the dynamics of the UK cloud market. These insights will inform the regulatory measures needed to ensure a level playing field for all cloud service providers.

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