Competition regulator sets sight on cloud services sector – UKTN

The cloud services industry could receive a major regulatory shakeup as the UK competition watchdog has claimed Microsoft and Amazon hold a disproportionate share of the market.

Following a two-year investigation into the industry, the Competition and Markets Authority (CMA) has concluded that competition in cloud services is “not working well”, due in part to the sheer dominance of Microsoft via Azure and Amazon via AWS, which collectively control as much as 80% of the UK cloud market.

The report identified how vital cloud services have become to both the public and private sector of the UK, with as much as £10.5bn having been spent by customers last year. Already integral to running modern digital services, the burgeoning role of AI has emphasised how impactful cloud will continue to be.

The CMA has therefore concluded that, given its vast importance, the amount of control held by the two largest players, as well as Google in a distant third, requires some form of intervention.

The group has recommended Microsoft and Amazon being designated as having strategic market status (SMS) in cloud services, which if approved would allow regulators to take bold action to address the oligopoly.

“The CMA investigation has rightly highlighted some outdated practices such as the complex hyperscaler pricing models and how egress fees prohibit end users from freely switching to a new provider,” commented Kevin Dunn, an executive at cloud storage company Wasabi.

“Cloud computing is a critical utility today and the lack of predictability on costs has created a significant hurdle for UK organisations to overcome. While the CMA recommends a new probe in the future, customers need more support from cloud providers today to help manage their spend.”

Last month, the CMA similarly targeted Apple and Google as having SMS in the app store industry, with the two firms controlling over 90% of the app store industry.

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