Jan 28, 2025, 5:00 PM
Jan 28, 2025, 12:00 AM

UK competition watchdog calls for investigation into AWS and Microsoft

Highlights
  • The UK Competition and Markets Authority proposed a probe into AWS and Microsoft's dominance in the cloud market.
  • The inquiry revealed that both companies hold significant market shares, limiting options for businesses.
  • The investigation could lead to reforms aimed at enhancing competition, innovation, and choice in cloud services.
Story

In the United Kingdom, concerns regarding competition in the cloud computing market have escalated, prompting the Competition and Markets Authority (CMA) to recommend a formal investigation into Amazon Web Services (AWS) and Microsoft's Azure cloud unit. The inquiry group highlighted that AWS and Microsoft dominate the market, each controlling approximately 40% of customer spending. This dominance limits choices for businesses and raises concerns over competition and pricing in the growing cloud services sector, which is valued at £9 billion. The CMA's push for an investigation stems from a report that criticized the current market dynamics, suggesting that the high concentration of power among a few players may lead to increased costs and reduced innovation. The independent inquiry suggested that regulatory oversight could improve competition by addressing technical and commercial barriers that lock users into specific providers and make it difficult for them to switch services. These barriers include egress fees for data transfers, licensing complexities, and the general interoperability challenges that exist between different cloud platforms. Furthermore, the investigation is supported by findings from Ofcom, the UK telecoms regulator, whose previous study on the cloud sector prompted the CMA's involvement. This ongoing scrutiny aims to ensure that the competitive landscape allows not only for cost-effective services but also for the innovation necessary to meet the needs of a rapidly evolving digital economy. The inquiry group also expressed particular concern regarding Microsoft's market power in the software arena, suggesting that it complicates competition for firms like AWS and Google that are striving to provide alternatives. Several responses to the inquiry have emerged from the companies involved. Microsoft has urged the CMA to consider the implications of their regulatory actions on future innovations within the cloud market, emphasizing the need for a focus on evolving capabilities rather than antiquated practices. AWS has similarly argued against the need for intervention, stating that the cloud computing market is robust, competitive, and beneficial for UK customers—asserting their belief that regulatory actions might stifle innovation rather than enhance it. As the CMA moves forward with its investigation, its findings may well reshape the cloud services market in the UK, potentially paving the way for increased competition, better pricing models, and improved service offerings across the board.

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