Amazon and Microsoft will be investigated for cloud computing rivalry

The cloud computing industry in the UK is set to undergo a thorough examination due to concerns over the dominance of Amazon and Microsoft. According to media regulator Ofcom, these two tech giants control a substantial 70-80% share of the UK's cloud computing sector, while their closest competitor, Google, holds only 5-10%.

Cloud computing is the practice of storing data online, accessible from anywhere at any time. It plays a vital role for both businesses and individuals, facilitating data storage, remote software use, streaming of media, and online gaming.

In April, Ofcom expressed worry that this lack of competition was hindering businesses from switching between service providers. Recently, Ofcom has taken the matter to the UK's Competition and Markets Authority (CMA) for a comprehensive investigation. Both Amazon and Microsoft have pledged their cooperation with the CMA during its inquiry.

Cloud computing relies on vast networks of powerful machines housed in massive data centers worldwide, many of which belong to Amazon or Microsoft. These services are widely adopted by businesses across the UK.

CMA Chief Executive Sarah Cardell emphasized the importance of effective competition in this market, ensuring a level playing field to prevent excessive market power from being concentrated in the hands of a few companies.

The CMA's independent inquiry group will investigate whether competition in this sector is functioning optimally and would propose remedies if such issues are identified. The investigation is expected to conclude by April 2025, and the CMA has the authority to enforce changes, block acquisitions, or require divestitures if deemed necessary to preserve market competition.

Ofcom's concerns is the difficulties faced by UK businesses when trying to switch between cloud providers and the fees associated with transferring data to a competitor. Ofcom is exploring options such as limiting or eliminating these fees to promote competition and consumer choice in the market.

Ofcom's petition to the CMA is to ensure that the cloud services market remains favorable for UK consumers and businesses in the future. It also seeks to create opportunities for rivals like IBM and Oracle to challenge the dominance of Amazon and Microsoft.

Microsoft affirmed its commitment to a competitive UK cloud industry that fosters innovation and growth, pledging cooperation with the CMA's Cloud Services Market Investigation.

Amazon maintained its position that Ofcom's findings form misconceptions that a significant portion of IT expenditure is not cloud-based but offering customers various IT solutions.