The Competition and Markets Authority (CMA) which is the antitrust regulator of the United Kingdom, has announced an investigation into the cloud infrastructure services market. The probe aims to confirm whether Microsoft and Amazon Web Services (AWS) have engaged in anti-competitive practices. According to the CMA, these practices are potentially hindering UK customers from using multiple suppliers for essential cloud services.
Cloud computing companies, including industry giants like Microsoft and AWS, utilize data centers globally to provide remote access to computing services and storage. This cloud infrastructure serves as the backbone for various software applications. These range from email services like Gmail to cloud storage platforms like Dropbox. The CMA’s decision to initiate an investigation follows a report from Britain’s media and communications regulator, Ofcom. The body revealed a high concentration of cloud infrastructure supply and limited competition in the UK.
Related:
Microsoft and M-PESA Partner to Develop Small Business Digital skills
CEO of the CMA, Sarah Cardell, expressed the necessity of effective competition in this market. The cloud services market in the UK is worth a staggering £7.5 billion (Ksh. 12.7 billion).
The European tech landscape has been witnessing increased scrutiny from regulators. This is after the European Digital Services Act, which came into effect recently, began a comprehensive effort to regulate tech giants. Companies like Amazon, Apple, Google, Microsoft, Snapchat, TikTok, and Meta (owner of Facebook and Instagram) are covered under this legislation.
According to Ofcom’s findings, Microsoft and AWS held a combined market share of 70-80% in the UK cloud infrastructure services market last year. On the other hand, Google was their closest competitor with a share of 5-10%. Ofcom’s report highlighted specific market features that made it challenging for customers to switch providers or use multiple providers. UK users cited concerns about switching fees and software licensing practices, especially with Microsoft.
Also Read:
New $850M Road Project to Link Copper and Cobalt Mines in Congo, Zambia, and East Africa
Both Amazon and Microsoft have stated their willingness to cooperate with the CMA during the investigation. However, an AWS spokesperson disagreed with Ofcom’s findings. According to the spokesperson, the findings were based on a fundamental misconception of the IT sector’s functioning and the services provided. The spokesperson emphasized that cloud services have made switching between providers easier than ever.
A Microsoft spokesperson reiterated the company’s commitment to ensuring a highly competitive and innovative cloud industry in the UK, which acts as a catalyst for economic growth.
Subscribe to our YouTube channel Switch TV
The CMA plans to conclude its investigation by April 2025, marking a pivotal juncture in the tech industry, where regulatory scrutiny aims to foster a fair and competitive landscape for cloud infrastructure services in the UK.
