UK Regulator Investigates Amazon and Microsoft’s Cloud Market Dominance

The UK’s Competition and Markets Authority (CMA) has launched an investigation into the market dominance of Amazon and Microsoft within the cloud services sector. This action follows concerns raised by Ofcom. The inquiry, led by CMA CEO Sarah Cardell, was initiated after Ofcom’s year-long investigation revealed potential threats to competition in the cloud services market, valued at £7.5 billion.

Ofcom’s research uncovered obstacles that businesses face when attempting to switch cloud service providers, highlighting the significance of this infrastructure for online services. The regulator expressed concerns about ‘hyperscalers’ Amazon and Microsoft, which collectively held a market share of 70-80% in 2022. Issues such as high egress fees and technical barriers to interoperability and portability were noted as key challenges, along with committed spend discounts.

In light of these findings, Ofcom referred the matter to the CMA. Sarah Cardell emphasized the critical importance of the cloud services market to the UK economy and stressed the need for measures to prevent excessive power concentration. The CMA’s investigation will focus on evaluating the potential negative impacts on competition and ensuring that a healthy competitive environment delivers maximum benefits.

This announcement also coincides with various global economic developments, including a recovery in Asia-Pacific shares following a bond sell-off, a rise in UK long-term borrowing costs to a 25-year high, and a slight increase in US private sector jobless claims.