British antitrust authorities opened an investigation Thursday into the country’s $9.1 billion cloud computing market after the communications regulator complained that Amazon and Microsoft were too dominant. File Photo by James Atoa/UPI
Oct. 5 (UPI) — British antitrust authorities opened a two-year investigation Thursday into the country’s $9.1 billion cloud computing market after a complaint from the communications regulator that Amazon and Microsoft were squeezing out competition.
The Competition and Markets Authority confirmed in a news release that it had opened a case, and appointed a four-person inquiry group from its independent panel of members with a statutory timetable that called for its probe to be completed by April 2025.
The decision came after a year-long study of the cloud computing market by Ofcom found numerous issues that could limit competition including high fees for transferring data out, committed spend discounts and technical restrictions that made it difficult for business customers to switch providers, or use multiple providers.
Ofcom said it was “particularly concerned” about the combined 70-80% market share of the sector’s leading players, Amazon and Microsoft, which it designates “hyperscalers,” by virtue of the fact the vast majority of cloud customers use their services in some form.
“If left unchecked, competition could deteriorate in a critical digital market for the U.K. economy,” Ofcom added.
CMA said it agreed that public cloud infrastructure services needed to be scrutinized in-depth because Britain’s $9.1 billion market underpinned a whole array of online services from social media to AI.
“Many businesses now completely rely on cloud services, making effective competition in this market essential,” said CMA CEO Sarah Cardell.
“Strong competition ensures a level playing field so that market power doesn’t end up in the hands of a few players — unlocking the full potential of these rapidly evolving digital markets so that people, businesses, and the U.K. economy can get the maximum benefits.”
The CMA’s investigation will determine whether competition in the cloud market is working as it should and if not, recommend the steps necessary to rectify issues flagged up.
In September, the authority granted preliminary approval for a restructured offer by Microsoft in its $69 billion bid to take over video game developer Activision-Blizzard after earlier blocking it due to concerns over the U.S. software giant’s dominance in cloud computing.
The CMA gave the go-ahead, pending a consultation that ends Friday, after Microsoft proposed transferring cloud streaming rights for Activision-Blizzard games to French developer Ubisoft. The regulator said the revised deal “substantially addressed concerns” around the dominance the merger would give Microsoft in cloud gaming, “opening the door to the deal being cleared.”
