UK to Probe Microsoft and Amazon Over Cloud Services in Antitrust Investigation

The UK’s Competition and Markets Authority (CMA) has announced that it will be conducting an antitrust investigation into the cloud services market in the country, specifically focusing on Microsoft and Amazon. The CMA is concerned that customers are facing difficulties in switching between providers, indicating potential anti-competitive practices. According to a report from the media regulator Ofcom, Microsoft and Amazon dominated the UK cloud services market last year, with a combined market share of 70-80%. Google takes third place with only 5-10% market share.

One of the key issues identified by Ofcom is the high egress fees that customers have to pay when transferring their data to another service, discouraging them from using multiple providers. Lack of interoperability and portability also add to the problem, making it laborious for customers to configure their data and apps to work on different services. Additionally, discounts offered by Microsoft and Amazon may dissuade customers from considering alternative providers.

These factors give Microsoft and Amazon an advantage over their competitors, limiting competition in the market. Ofcom warns that the difficulty in switching and using multiple providers can hinder the ability of competitors to challenge the dominance of Microsoft Azure and Amazon Web Services (AWS).

Furthermore, Ofcom received submissions raising concerns about the licensing practices of Microsoft’s business software products, such as Windows and Microsoft 365, on rival cloud infrastructures. Some cloud service providers argued that Microsoft engages in practices that make it less attractive for customers to use its licensed software on competitors’ platforms, thereby restricting competition for customers.

After the CMA announced the probe, Sarah Cardell, CEO of the CMA, emphasized the importance of effective competition in the £7.5 billion ($9.1 billion) cloud services market. The investigation is expected to conclude by April 2025.

Both Microsoft and Amazon have stated their commitment to cooperating with the CMA. Amazon challenged Ofcom’s claims, arguing that they were based on a misunderstanding of the functioning of the IT sector and the services and discounts offered.

This announcement comes amidst another regulatory scrutiny faced by Microsoft regarding its cloud gaming market power. The CMA had previously raised concerns about Microsoft’s acquisition of Activision Blizzard, and the company responded by pledging to make concessions, including ensuring the availability of Activision Blizzard titles on Ubisoft’s platforms.

Source: Microsoft and Amazon face a UK antitrust probe over cloud services