The UK’s Competition and Markets Authority (CMA) has launched a new probe into the cloud services industry, targeting tech giants Microsoft and Amazon (via The Verge.) This comes on the heels of a report from telecoms regulator Ofcom, which highlighted issues with customer freedom and market competition.
Ofcom’s initial study raised some red flags about the current cloud services market in the UK. Customers face steep charges when moving data out of the cloud, get discounts for sticking with a single provider, and find it technically tricky to switch between different providers. Microsoft, in particular, was called out for its software licensing practices.
The report revealed that both Microsoft and Amazon control a significant chunk of the cloud infrastructure market in the UK, somewhere between 70 and 80 percent. This market power raises questions about whether these companies are unfairly hindering competition. Although Amazon was not directly named by the CMA, its dominant position alongside Microsoft prompted the new investigation.
The concerns over market competition in cloud services aren’t confined to the UK. Last year, the Cloud Infrastructure Services Providers in Europe (CISPE) filed an antitrust complaint against Microsoft in the EU. The group argues that Microsoft’s market dominance lets it steer European customers to its Azure cloud platform, hurting consumers and other providers.
Adding fuel to the fire, Google has also criticized Microsoft’s licensing fees for running Microsoft software on other cloud platforms. Amit Zavery, head of platform at Google Cloud, argued that Microsoft imposes a “tax” on businesses that want to run their software on other networks, making Azure the cheaper option by default.
Microsoft tried to avoid a full-blown EU antitrust investigation earlier this year by offering to change some cloud computing practices. However, a formal investigation of Microsoft’s Teams software is underway.
The UK’s new investigation could last up to 18 months, with findings expected by April 2025. The CMA can take decisive action, forcing companies to sell off parts of their business to increase competition.