UK Investigation Launched Over Concerns of Amazon and Microsoft Cloud Computing Power

An investigation into the competitiveness of the key industry has been initiated due to regulators’ concerns about the overwhelming presence of Amazon and Microsoft in Britain’s cloud computing market.

Britain’s communications regulator Ofcom said on Thursday that its year-long investigation into the market for cloud communications services found features that could restrict competition. British businesses face barriers when trying to switch or use multiple cloud providers, it said.

The cloud service uses data centers around the world to store images and emails or run software. It has become a vital service for many companies that turn to cloud service providers to avoid the cost of purchasing expensive equipment and real estate to run their own data centers.

Ofcom asked Britain’s competition watchdog, the Competition and Markets Authority, to take a closer look at the £7.5 billion ($9 billion) cloud market. The watchdog said it will launch a thorough investigation, which is expected to be completed by April 2025.

“Some UK businesses have told us they are concerned that switching or merging cloud providers is too difficult and it is not clear whether competition works well,” Ofcom’s director of market research, Fergal Farragher, said. Press release. “So we are referring the market to the CMA for further investigation to ensure that business customers continue to benefit from cloud services.”

Ofcom said it was concerned about the position of Amazon and Microsoft. which together make up 70-80 percent of the cloud market. Google lagged behind with 5-10% share, with smaller players making up the rest.

Amazon Web Services, the cloud computing business of the e-commerce giant, said it disagreed with Ofcom’s findings, which it said were “based on a fundamental misunderstanding of how the IT sector works and the services and discounts offered”.

“The cloud has made switching between service providers easier than ever. Any unwarranted interference could lead to unintended harm to IT customers and the competition,” the company said in a statement.

Both companies said they would cooperate constructively with the CMA.

“We are committed to ensuring that the UK cloud industry remains innovative, highly competitive and an accelerator of growth across the economy,” Microsoft said in a statement.

Ofcom said it was concerned about fees, technical barriers and discounts that might prompt customers to switch or use more than one service provider. The CMA said it will investigate whether the competition is working well and what needs to be done if it is not.