UK to examine Amazon and Microsoft’s cloud dominance

UK to examine Amazon and Microsoft’s cloud dominance

By Paul Sandle and Yadarisa Shabong

LONDON (Reuters) -Britain’s media regulator on Thursday asked the country’s antitrust authority to investigate U.S. tech giants Amazon and Microsoft’s dominance of the UK cloud market.

Ofcom said it had identified features that made it more difficult for UK businesses to use multiple cloud suppliers.

Amazon Web Services (AWS) and Microsoft had a combined 70-80% share of Britain’s public cloud infrastructure services market in 2022, Ofcom said. Google was their closest competitor with 5-10%.

Britain is not the only country looking into cloud computing; the U.S. Federal Trade Commission asked for information about the market in March, citing similar interest in the UK, France, Japan, The Netherlands and South Korea.

“The CMA (Competition and Markets Authority) will now conduct an independent investigation to decide whether there is an adverse effect on competition, and if so, whether it should take action or recommend others to take action,” it said.

Amazon said it disagreed with Ofcom, whose findings were based on “a fundamental misconception of how the IT sector functions, and the services and discounts on offer”.

“Any unwarranted intervention could lead to unintended harm to IT customers and competition,” a spokesperson said.

But it said it would work constructively with the CMA.

Microsoft said it was committed to ensuring the UK cloud industry remained innovative and highly competitive. “We will engage constructively with the CMA,” a Microsoft spokesperson said.

Dan Ridsdale, TMT director at research company Edison, said the dominance of AWS, Microsoft and to a lesser extent Google was replicated across every major economy other than China.

But Britain was the most advanced in addressing the issue, he said, and was now on a path to potentially taking action.

“Other jurisdictions are likely to follow suit and regulatory action of one form or another looks inevitable,” he said.

The French antitrust authority said in June that practices in the sector could potentially restrict competition, while the EU regulator is scrutinising Microsoft’s cloud practices following a complaint by trade group Cloud Infrastructure Services Providers in Europe (CISPE) whose members include Amazon.

MICROSOFT-CMA HISTORY

The CMA and Microsoft have already clashed this year when the regulator blocked the company’s $69 billion acquisition of games company Activision Blizzard.

A restructured deal found favour but the episode made clear the CMA’s willingness to take on big tech.

Ofcom said in April it was worried about the practices of AWS and Microsoft because of their market positions in the cloud market, and planned to ask the competition regulator to investigate.

Reuters reported on Tuesday that Ofcom was expected to push for an antitrust investigation.

UK businesses told Ofcom they were concerned it was too difficult to switch or mix and match cloud providers.

“So, we’re referring the market to the CMA for further scrutiny,” Ofcom Director Fergal Farragher said.

The CMA welcomed the move, saying effective competition in the 7.5 billion pound ($9.1 billion) UK market was essential.

Google Vice President Amit Zavery said Ofcom’s referral demonstrated the need to create an open cloud market with no vendor lock-in.

“UK government agencies, businesses, and consumers want to move easily across cloud platforms and choose which services best meet their needs,” he said, adding Google would continue to allow its products to run on any cloud without penalty.

The CMA will complete its investigation by April 2025.

($1 = 0.8232 pounds)

(Reporting by Yadarisa Shabong in Bengaluru and Paul Sandle in London, additional reporting by Foo Yun Chee in Brussels; Editing by Mark Potter, Jan Harvey, Jacqueline Wong and Jane Merriman)