September 27, 2023

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Amazon and Microsoft face referral to UK regulator over cloud services market

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Amazon and Microsoft are facing a referral to the UK’s competition regulator over allegedly harming competition in the online cloud services market, amid “significant concerns” that big tech companies are abusing their positions.

The British communications regulator, Ofcom, said it was proposing to refer the whole sector to the Competition and Markets Authority (CMA), adding that it was “particularly concerned about the practices of Amazon and Microsoft because of their market position”.

It said it had “significant concerns” after finding “behaviours by some providers that could raise barriers to switching and use of multiple providers”.

The companies and other interested organisations will have until 17 May to respond to Ofcom’s consultation, and the regulator will make a final decision on whether to refer the sector to the CMA by 5 October.

The cloud services market – providing easy access to remote datacentres for a fee – has grown rapidly in the last decade to become a vital foundation for many of the world’s biggest websites and online services ranging from video streaming to mobile apps and government webpages.

That expansion has been behind the soaring global profits of Amazon and Microsoft in particular. Amazon Web Services and Microsoft Azure control between 60% and 70% of the UK market, Ofcom said. Google, owned by Alphabet, was the nearest competitor to the pair, with between 5% and 10% of the UK market.

An investigation of the cloud services sector would represent yet more regulatory scrutiny of big tech companies in the UK. The Financial Conduct Authority is looking into whether companies such as Apple, Google and Amazon could harm competition in Britain’s financial services sector, while the CMA has previously said it would strengthen its ability to investigate big tech companies under its digital markets unit.

The CMA has wide-ranging powers to insist on changes to business models of companies who are found to distort…

Business Matters

2023-04-05 04:57:43

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