The UK regulator, Ofcom, has raised concerns about the difficulty for consumers to switch and use multiple cloud suppliers, which could be limiting competition in the internet industry.
As a result, Ofcom has recommended that the Competition and Markets Authority (CMA) open an in-depth probe into the cloud services offered by Amazon and Microsoft.
Ofcom’s year-long study into the cloud market found evidence of practices that make it hard for people to switch and use multiple cloud suppliers, particularly with Amazon and Microsoft due to their market position.
Ofcom’s study has highlighted several issues, including high barriers to switching, charges for data transfer, and technical restrictions on interoperability between platforms. The agency has also flagged the use of discounts by the biggest businesses to entice customers to use one provider when they could be getting better quality elsewhere.
Ofcom is “particularly concerned” about Amazon and Microsoft because of their market position, as they account for four-fifths of revenue in the UK public cloud infrastructure market, which is worth ￡15 billion (US$18.7 billion).
Ofcom’s concerns echo those raised in other countries. The EU has faced complaints from cloud firms over potential antitrust violations in the industry, and Germany’s Federal Cartel Office has cited the “strong increase in the importance” of Microsoft’s cloud services in its probe into the firm’s market power.
Ofcom’s probe into Amazon and Microsoft’s cloud services is part of its broader remit, which also oversees broadcasting, telecommunications, and the postal service.
The agency opened a probe in October last year based on concerns that the so-called hyperscale cloud providers, including Amazon’s AWS, Microsoft’s Azure, and Alphabet Inc’s Google Cloud, might limit innovation and growth.
Ofcom’s final report on its findings and its decision on the referral to the CMA will be made before Oct. 5. The CMA spokesperson said they are ready to carry out a market investigation into this area should Ofcom determine it is required following the completion of its consultation process.
The CMA is one of the most high-profile watchdogs probing Microsoft’s US$69 billion takeover of Activision Blizzard Inc. The watchdog said last month it had narrowed its probe to focus solely on cloud gaming.
In response to Ofcom’s findings, a Microsoft spokesperson said the company remains committed to ensuring the UK cloud industry stays highly competitive and to supporting the transformative potential of cloud technologies to help accelerate growth across the UK economy.
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