The Competition and Markets Authority (CMA) in the UK has launched a full-scale investigation into the practices of major cloud infrastructure companies, including Amazon’s AWS, Microsoft, and Google. The investigation aims to determine whether these companies engage in anti-competitive behavior that makes it difficult for businesses to switch between providers or utilize multiple providers.
Key Takeaway
The UK’s Competition and Markets Authority is launching an investigation into major cloud providers, including AWS, Microsoft, and Google, to determine if their practices hinder fair competition and customer choice. The investigation will focus on issues such as egress fees, interoperability, and committed spend discounts. The outcome of this investigation could have significant implications for the UK cloud services market.
Regulatory Body Takes Action
This investigation comes as a result of a market study initiated by Ofcom, the regulatory body responsible for the UK’s cloud services market. Ofcom had previously expressed concerns about the practices of major cloud providers and has now referred the matter to the CMA for further investigation.
CMA CEO Sarah Cardell emphasized the importance of competition in the cloud market, stating that “many businesses now completely rely on cloud services, making effective competition in this market essential.” The aim of the investigation is to ensure a level playing field and prevent a concentration of market power in the hands of a few players.
Key Concerns and Areas of Focus
The investigation will focus on several key areas of concern, including:
- Egress Fees: The investigation will examine non-transparent fees that cloud providers charge for moving data out of their platforms, which can make it prohibitively expensive for businesses to switch to a different provider.
- Interoperability: The CMA will investigate whether cloud companies design their products in a way that restricts compatibility with rival services, potentially creating barriers for businesses pursuing a multi-cloud approach.
- “Committed Spend Discounts”: The practice of offering discounts to companies that commit to spending a certain amount with a single cloud vendor will also be scrutinized.
Ofcom’s report specifically highlights AWS and Microsoft as the main subjects of concern due to their dominance in terms of cloud revenue. It also mentions possible issues with Microsoft’s software licensing practices and its potential impact on competition in the market.
Industry Response
The investigation has garnered support from industry players who believe that action needs to be taken to ensure fair practices. Sridhar Iyengar, European managing director of cloud business software company Zoho, emphasized the importance of avoiding restrictive cloud contracts that disincentivize switching providers.
Mark Boost, CEO of UK cloud company Civo, focused on the issue of egress fees, calling for significant price controls or the abolition of these fees to make it easier and less costly for businesses to migrate their data.
Both Microsoft and Amazon have expressed their willingness to cooperate with the investigation. Microsoft intends to “engage constructively” with the CMA, while Amazon disagrees with Ofcom’s findings and believes that the investigation is based on a “fundamental misconception of how the IT sector functions.”
