The British competition authority CMA has made a preliminary finding that competition in the cloud services sector is not working well. Amazon Web Services and Microsoft each own about 40 per cent of the UK cloud services market.
Because of the dominance, the regulator wants to investigate the two companies. This is to look at stricter competition rules for digital markets that recently came into effect, Bloomberg knows. These new rules give the CMA the power to label companies as having a Strategic Market Status. Under the rules, the regulator can impose conduct requirements on companies, issue hefty fines and take measures to promote competition.
Impact on UK economy
The CMA’s findings come as the ruling Labour Party moves to pressure regulators to boost growth. With users spending £9 billion (€10.7 billion) on cloud services last year, designating companies could boost economic growth.
Kip Meek, chairman of the CMA’s independent research group, stressed the importance of effective competition for choice, quality and competitive prices in this sector.
“The draft report should be focused on paving the way for the UK’s AI-powered future, not fixating on legacy products launched in the last century,” says Rima Alaily, Corporate Vice President and Deputy General Counsel Competition Law Group at Microsoft. “The cloud computing market has never been so dynamic and competitive, attracting billions in investments, new entrants, and rapid innovation. What could be better for UK businesses and government?”
Google, a competitor in the cloud market, responded positively to the CMA’s announcement. The company argued that restrictive licenses harm British cloud customers and hinder innovation. The CMA began its market research on cloud services in October 2023 and will formalize its views in August.
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