CMA urged to expedite proposed ‘targeted interventions’ against AWS and Microsoft | Computer Weekly

Amazon Web Services (AWS) has hit out at the UK competition watchdog for presenting “no credible evidence” to support its claims the public cloud giant’s anti-competitive behaviour is harming how the domestic cloud infrastructure market operates.

The Competition and Markets Authority’s (CMA) published the provisional findings from its multi-year antitrust investigation into the inner workings of the UK’s cloud infrastructure market in late January. And the CMA has now published the responses it has received from AWS, Microsoft, Google and several other market stakeholders.

As previously reported by Computer Weekly, the CMA’s provisional findings indicated that it could introduce “targeted interventions” against AWS and Microsoft so they are subject to controls to curb behaviours the CMA claims are contributing to making the UK cloud services market uncompetitive.

This would involve the CMA calling on powers conferred on it through the roll-out of the Digital Markets, Competition and Consumers Act 2024 on 1 January 2025 to mark AWS and Microsoft out as suppliers with “strategic market status”.

This would mean the CMA could impose legally binding conduct requirements or pro-competition interventions on both firms to limit and remedy the toll their activities have allegedly had on the market.

At the time, AWS described the prospect of finding itself on the receiving end of targeted interventions as “not warranted” and has now expanded further on its reasons for feeling that way in a 30-page written response that states the CMA’s provisional findings “present no credible evidence” to support some of its claims.

Specifically, AWS said there is no interoperability issues or technical barriers preventing cloud users from switching providers, or from making use of multicloud setups, and the CMA’s report has “not identified any specific interoperability concerns in respect of any AWS services” either.

“There is no interoperability problem in cloud services, and the provisional decision report presents no evidence to support its concerns either,” said AWS, in its response.

It also claimed data transfer fees do not “hinder switching and multiclouding” and that “again, the PDR [provisional decision report] presents no credible evidence in supports of its concerns”.

AWS said it welcomed the part of the CMA’s provisional decision report that acknowledged competition in the cloud services market enables “innovation, investment and improved productivity among all customers for the benefit of people, businesses and the UK economy”.

However, AWS went on to state that the report’s contents “fails to reflect this reality … by recommending unwarranted intervention applicable to only two players in one of the most competitive, well-functioning and fast-growing sectors of the UK economy. Its proposed interventions … risk damaging the UK economy’s broader prospects for growth, innovation and productivity.”

Microsoft was similarly scathing in its 101-page response to the CMA’s provisional findings, and said it should come as “no surprise that we disagree with substantial portions” of the report, and claims it needs “deep revision”.

This is because, in Microsoft’s view, the CMA is focusing on issues that are “largely peripheral to cloud computing competition today”, which include egress fees, interoperability issues and Microsoft’s licensing tactics.

“It is hard to see how intervention in these three areas will meaningfully boost competition in cloud computing,” said Microsoft. “There is a real danger that intervening in the market based on [the CMA’s] misunderstanding will backfire, leaving the UK with the opposite of the CMA’s goal of a healthy, well-functioning market, rich in growth and investment.”

In contrast, the Google Cloud team said it was broadly supportive of what the CMA had initially concluded in its report, and stated the CMA’s findings are “further reinforced” by customer feedback, analyst reports and the CMA’s profitability assessments.

“No credible evidence in relation to the structure of the market and the market positions enjoyed by AWS and Microsoft has been put forward that contradicts these provisional findings,” said Google.

It added: “The extensive data and evidence gathered as part of this CMA market investigation and the preceding Ofcom market study provides a clear and compelling evidence basis for the Digital Markets Unit to conclude quickly that AWS and Microsoft have strategic market status in the cloud infrastructure market.”

This is a sentiment echoed in the response of the pro-cloud market competition lobbying body, the Open Cloud Coalition, who further called for an acceleration in the time taken to confer SMS status on both Amazon and Microsoft.

“The CMA should work to accelerate the DMU process and explore interim measures or clear guidance to ensure public sector procurement authorities actively consider the anti-competitive impact of restrictive software licensing and excessive egress fees when awarding contracts,” said the OCC.

“The CMA cannot impose conduct requirements until an SMS designation is in place, [but] it can take steps to ensure that regulatory intervention is as swift and effective as possible. Proactive measures are needed to prevent further entrenchment of restrictive licensing practices while the DMU process is ongoing.”