UK regulator Ofcom called on the country’s Competition and Markets Authority (CMA) to investigate potential dominance of the cloud sector by Amazon and Microsoft, after its own probe uncovered concerns.
Ofcom stated a market study launched in 2022 identified examples where it was difficult for UK businesses to switch and use multiple cloud suppliers, raising flags in particular about Amazon Web Services (AWS) and Microsoft.
It estimated the pair had a combined share of between 70 per cent and 80 per cent of UK’s cloud market in 2022, with Google their closest competitor with a share of between 5 per cent and 10 per cent.
Of its biggest concerns, Ofcom highlighted: egress fee forced on customers by the two so-called hyperscalers to transfer data out of a cloud; technical barriers to interoperability and portability making it harder for customers to work on different clouds; and committed spend discounts, which are structured to incentivise customers to use a single company for all their cloud needs “even when better quality alternatives are available”.
Ofcom noted that in the future, if customers have difficulty switching and using multiple providers, “it could make it harder for competitors to gain scale and challenge AWS and Microsoft effectively”.
The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competitors.
“Making a market investigation reference is a significant step for Ofcom to take. Our reference reflects the importance of cloud computing to UK consumers and businesses, and the significant concerns we have about the cloud infrastructure market,” added Ofcom.