2 min

Ofcom, the UK’s national telecom regulator, announced a probe into the competition in the cloud services market, a segment dominated by hyperscalers like AWS, Microsoft Azure and Google Cloud.

Ofcom announced that it would investigate additional digital marketplaces within the next year, covering messaging services such as WhatsApp, FaceTime and Zoom, as well as interconnected televisions and smart speakers.

It stated that if it finds the cloud market isn’t functioning correctly, it may suggest policy reforms, take enforcement action or request an investigation from the UK’s competition authority. The final report, it said, will be published within 12 months.

Domination is evident

According to statistics from Synergy Research Group, AWS, Microsoft Azure, and Google Cloud accounted for 65 percent of the global public cloud market in Q2 2022.

Ofcom says their dominance is even more evident in the UK, where the trio accounted for 81 percent of revenue for the public cloud infrastructure market last year. This includes public and commercial organizations. AWS alone has received government contracts worth £600 million in the last five years.

Ofcom said it will look at how the market is operating today and how it’s expected to grow. Afterwards, it will attempt to identify any potential competition problems to prevent them from becoming ingrained as the market develops.

Cloud services have skyrocketed

In 2018, public cloud services accounted for less than 10 percent of all worldwide IT investments. This grew to 17 percent last year because of increased remote working prompted by the pandemic. Ofcom expects public cloud services to account for 45 percent of commercial IT spending by 2026.

The watchdog’s broader investigation into messaging apps and smart speakers will review how they’re altering the function of conventional calling and messaging, and how competition may evolve in the coming years.

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