Microsoft and Amazon to face antitrust probe over their dominance in cloud computing. Both powerhouses in the tech industry are currently facing antitrust probes and this means that the cloud market in the UK could be set for a major shakeup.
Microsoft and Amazon to Face Antitrust Probe
The British Office of Communications, or Ofcom, as it is also known has just referred the cloud market of the country to the Competition and Markets Authority (CMA) for an investigation into the apparent dominance of some major providers in the game.
The report in question focuses majorly on Amazon and Microsoft, which combined, accounted for between 70% as well as 80% of the market in the year 2022.
Ofcom has reportedly raised concerns regarding fees as well as technical limitations that make it really hard for customers to switch providers, which simply means that many find themselves locked into making use of just one provider.
Similar investigations as you should know have been headlining the news across Europe for several months now as Microsoft has been finding itself in hot water over unfair licensing terms as well as anticompetitive practices.
What Ofcom’s Director Responsible for the Market Survey Has to Say
Fergal Farragher, the director at Ofcom who is responsible for the market survey, in a statement stated:
“Some UK businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud providers, and it’s not clear that competition is working well. So, we’re referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services.”
Both AWS and Azure accounted for between 30% and 40% of the market each, thus placing them way ahead of the competition in general, with Google Cloud on the other hand coming in third place with just 5% to 10% of the market in the year 2022.
Ofcom stated that practices designed to cut down the competition are inclusive of committed spend discounts that are designed to incentivize customers to make use of one hyperscaler, high egress fees for data transfers as well as migrations, and technical limitations thus causing interoperability as well as portability issues.
An Ofcom press release reveals: “The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competition.”
When Users May Start To See Meaningful Changes
Precisely when the UK may see several meaningful changes cannot be confirmed as of yet and this early on in an investigation, but similar EU, as well as global investigations, have taken a couple of months, and even sometimes years, to rightly produce any sort of result that would impact customers positively.
AWS’s Reaction to the News
“We disagree with Ofcom’s findings and believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer,” an AWS spokesperson revealed to TechRadar Pro.
“Only a small percentage of IT spend is in the cloud, and customers can meet their IT needs from any combination of on-premises hardware and software, managed or co-location services, and cloud services. AWS designs cloud services to give customers the freedom to choose technology that best suits their needs. UK companies, and the overall economy, benefit from robust competition among IT providers, and the cloud has made switching between providers easier than ever. Any unwarranted intervention could lead to unintended harm to IT customers and competition. AWS will work constructively with the CMA.”
Microsoft’s Reaction to the News
A Microsoft spokesperson to TechRadar Pro in an email stated: “We are committed to ensuring the UK cloud industry remains innovative, highly competitive, and an accelerator for growth across the economy. We will engage constructively with the CMA as they conduct their Cloud Services Market Investigation.”
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