UK Antitrust Probe Targets Microsoft and Amazon's Dominance in Cloud Services - What You Need to Know!

Microsoft and Amazon are under scrutiny for allegedly impeding UK customers from accessing multiple providers of essential cloud services. The Competition and Markets Authority (CMA), the antitrust regulator in the country, announced on Thursday that it is initiating an investigation into the market for cloud infrastructure services in the UK. The purpose of this investigation is to ascertain whether the involved companies are involved in practices that hinder competition.

Cloud computing companies like Microsoft and Amazon Web Services (AWS) utilize global data centers to deliver remote access to computing services and storage. This network of data centers, known as "cloud infrastructure," serves as the underlying framework for the development and operation of various software applications, including popular ones like Gmail and Dropbox.

A man holds an Apple iPhone 13 with Instagram on the screen at a cafe.

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Meta is considering implementing a paid subscription option in the European Union that would allow users to avoid targeted ads. The investigation conducted by the Competition and Markets Authority (CMA) was prompted by a report from Ofcom, the UK's media and communications regulator. Ofcom's findings revealed a significant lack of competition and a high concentration of cloud infrastructure suppliers in the United Kingdom.

"We appreciate Ofcom's decision to refer public cloud infrastructure services to us for a detailed examination," stated CMA CEO Sarah Cardell.

"This market, valued at £7.5 billion, forms the backbone of numerous online services, ranging from social media platforms to artificial intelligence foundation models. Given that numerous businesses now heavily rely on cloud services, it is imperative to ensure robust competition in this market."

The CMA plans to complete its investigation by April 2025, indicating another sign of escalated surveillance of major tech companies by European regulators. These regulators have been implementing stricter regulations in recent years, specifically in the domains of data protection and targeted advertising.

The European Digital Services Act, implemented in late August, represents an extensive and ambitious endeavor to regulate tech giants, including Amazon, Apple, Google, Microsoft, Snapchat, TikTok, and Meta (owner of Facebook and Instagram). Ofcom reports that in the UK cloud infrastructure services market, Microsoft and AWS held a dominant market share ranging from 70-80% last year, with Google being their closest competitor with a share of 5-10%.

On June 22, 2023, Thierry Breton, the European Commissioner for Internal Market, addressed the media at the European Union office in San Francisco, California. The event was captured in a photograph taken by Josh Edelson of AFP. (Photo by JOSH EDELSON/AFP via Getty Images)

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Ofcom's report highlights the market's characteristics, including switching fees, that hinder customers from changing providers or utilizing multiple providers. Ofcom stated that this difficulty in switching can pose challenges for competitors to effectively compete with AWS and Microsoft in acquiring new and existing customers.

The software licensing practices of certain cloud providers, notably Microsoft, were a source of concern highlighted in the report. Both Amazon and Microsoft expressed their willingness to collaborate with the CMA in a constructive manner.

AWS spokesperson expressed disagreement with Ofcom's findings, stating that they are based on a flawed understanding of the IT sector and the offerings of services and discounts. The spokesperson highlighted the ease of switching between cloud providers with the advancements of the cloud technology.

Microsoft spokesperson affirmed their commitment to fostering innovation, maintaining high competitiveness, and driving economic growth in the UK cloud industry.