By Michael Susin
Amazon and Microsoft face an antitrust probe in the U.K. over their cloud dominance after the country’s communications regulator alleged that certain market features could limit competition.
The U.K.’s Office of Communications on Thursday said it is concerned about the position of Amazon and Microsoft as leading providers of cloud services, and asked the competition watchdog to further investigate the market. The Competition and Markets Authority launched a probe that is expected to be concluded by April 2025, it said.
Amazon’s cloud business, Amazon Web Services, disagrees with Ofcom’s findings but will co-operate with the investigation, a company spokesperson said. The findings could be based on a fundamental misconception of how the I.T. sector functions, and the services and discounts on offer, the spokesperson said.
Microsoft will engage with the watchdog during the market investigation, a spokesperson said.
The probe is the latest move by regulators in the U.K. and Europe targeting tech giants as regulators worldwide tighten their scrutiny of the industry.
“Many businesses now completely rely on cloud services, making effective competition in this market essential,” CMA Chief Executive Sarah Cardell said.
Ofcom’s referral of the cloud market to the CMA came after the communications regulator said a study found that high fees for transferring data, committed spend discounts and technical restrictions could make it difficult for customers to switch cloud provider or to use multiple providers.
“AWS does not charge separate fees for switching data to another I.T. provider. Customers make hundreds of millions of data transfers each day in the ordinary course of business, and over 90% of our customers pay nothing for data transfer because we provide them with 100 gigabytes per month for free,” the Amazon spokesperson said.
AWS and Microsoft had a combined share in the U.K. of 70% to 80% in 2022 of a market worth up to 7.5 billion pounds ($9.10 billion), Ofcom said. The third-largest cloud player, Alphabet’s Google, holds a market share of between 5% and 10%, according to the regulator’s study.
Beyond the largest three players, there is a range of smaller cloud providers that includes Oracle and IBM, but their market shares are considerably smaller at below 5%, Ofcom said.
“Some U.K. businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud provider, and it’s not clear that competition is working well,” Ofcom’s director responsible for the market study, Fergal Farragher, said.
The CMA said it has set up an independent panel to make decisions on the investigation. The probe aims to check whether there are competition concerns and what interventions can improve the services if so, it said.
Write to Michael Susin at [email protected]
Read the full article here
