CMA finds Microsoft and AWS are harming competition in UK cloud market

In the United Kingdom, the Competition and Markets Authority (CMA) conducted a thorough investigation into the cloud computing market, concluding that it is not functioning effectively. The inquiry, featuring an independent panel, especially pointed fingers at Microsoft and Amazon Web Services (AWS) for their significant market power and aggressive competitive practices. The inquiry raised serious concerns regarding Microsoft's pricing strategies, particularly how it charges Amazon and Google for software, leading to increased costs across the board. It revealed that the lack of competition in the approximately £9 billion cloud sector is adversely affecting prices, choice, innovation, and overall service quality for businesses operating in the UK. The report indicated that both AWS and Microsoft’s Azure each hold around 40% of the consumer spending in this market, positioning Google at a lower tier. Specifically, Microsoft’s licensing policies were outlined as detrimental to the competitiveness of other cloud service providers, such as AWS and Google. These policies result in weakened competitive constraints on Microsoft, ultimately compromising fair competition in the cloud services market. The long-term implications of this imbalance suggest a need for intervention to safeguard customer interests and ensure fair competition. The CMA recommended utilizing new regulatory powers to grant Microsoft and AWS what they termed 'strategic market status', allowing for bespoke interventions to tackle the identified competitive issues. However, this process will not commence until 2026, as the CMA is currently focused on assigning this status to Google and Apple regarding their significant influence in mobile platforms. Responses to the findings varied. Microsoft defended its position, arguing that the cloud market has never been more robust, with rapid innovation and investment. AWS echoed similar sentiments, stating that the CMA's recommendations would hinder the industry's growth and the competitive landscape, which they believe is already healthy. Conversely, Google welcomed the CMA’s findings, calling for immediate actions to ensure fair competition and advocate for economic growth for UK businesses. This diverging framework of responses reflects the complexity of the issue at hand, revealing the high stakes involved for each of these major players in the technology landscape.