February 29, 2024


London
CNN
 — 

Microsoft and Amazon could be in hot water over apparently making it difficult for UK customers to use multiple suppliers of vital cloud services.

The Competition and Markets Authority (CMA), the country’s antitrust regulator, said Thursday it was launching an investigation into the UK cloud infrastructure services market to determine whether players were engaged in anti-competitive practices.

Cloud computing firms, such as Microsoft and Amazon Web Services (AWS), use data centers around the world to provide remote access to computing services and storage. This “cloud infrastructure” forms the foundation for how software applications, such as Gmail and Dropbox, are developed and run.

The CMA probe has been initiated following a report from Britain’s media and communications regulator Ofcom, which found that the supply of cloud infrastructure in the United Kingdom is highly concentrated and competition limited.

“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny,” CMA CEO Sarah Cardell said in a statement.

“This is a £7.5 billion market that underpins a whole host of online services — from social media to [artificial intelligence] foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”

The CMA said it would conclude its investigation by April 2025.

The probe is the latest evidence of increased scrutiny of big tech companies by European regulators, which have tightened rules in recent years in areas such as data protection and targeted advertising.

The European Digital Services Act, which came into force at the end of August, reflects one of the most comprehensive and ambitious efforts by policymakers anywhere to regulate tech giants. It applies to companies including Amazon (AMZN), Apple (AAPL), Google (GOOG), Microsoft (MSFT), Snapchat, TikTok and Meta (META), the owner of Facebook and Instagram.

According to Ofcom, last year Microsoft and AWS had a combined market share of 70-80% in the UK cloud infrastructure services market. Google is their closest competitor with a share of 5-10%.

In its report, Ofcom identified features of the market that make it more difficult for customers to change providers or to use multiple providers, such as switching fees.

“If customers have difficulty switching and using multiple providers, it could make it harder for competitors to gain scale and challenge AWS and Microsoft effectively for the business of new and existing customers,” Ofcom wrote.

The report also raised concerns about the software licensing practices of some cloud providers, particularly Microsoft.

Both Amazon and Microsoft said they would engage “constructively” with the CMA.

But a spokesperson for AWS added that the company disagreed with Ofcom’s findings. “We… believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer,” the spokesperson said, noting that “the cloud has made switching between providers easier than ever.”

A spokesperson for Microsoft added: “We are committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy.”

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