Amazon and Microsoft’s cloud dominance referred to UK competition probe

Ofcom said it has received evidence showing that Microsoft is making it less attractive for customers to run its Office productivity apps on cloud infrastructure other than Microsoft Azure.

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Britain’s anti-competition regulators have been tasked with investigating microsoft and Amazon’s dominance in the cloud computing market.

On Thursday, media watchdog Ofcom referred its investigation for further investigation, starting the process.

“Some UK businesses have told us they are concerned it is too difficult to switch or mix and match cloud providers, and it is not clear that competition is working well,” Fergal Farragher, the Ofcom director responsible for the study, said in a statement. of market. Thursday statement.

“We are therefore referring the market to the CMA for further scrutiny, to ensure that enterprise customers continue to benefit from cloud services.”

Ofcom is concerned that so-called “hyperscalers” such as Amazon Web Services and Microsoft Azure are limiting competition in the cloud computing market. These are companies that enable businesses of all types to perform critical computing tasks (such as data storage and management, content delivery, analytics and intelligence) over the Internet, rather than through servers stored on site or “on site”.

AWS and Microsoft Azure are the biggest players in the market. AWS’s cloud solution is primarily aimed at startups, while Microsoft prioritizes large enterprises. AWS and Microsoft Azure account for approximately 60% to 70% of cloud spending, according to an Ofcom estimate. Combined, Amazon, Microsoft and Google generate about 81% of revenue in the UK cloud infrastructure services market, according to Ofcom, which estimates the market is worth £15 billion ($18.2 billion).

Competing cloud companies, including Google, as well as regulators, have flagged concerns with Microsoft Azure, in particular, namely allegedly unfair licensing terms that serve to “lock customers in,” keeping them connected only to Microsoft technology. , which makes change difficult. to other suppliers.

The terms of Microsoft’s cloud license are the subject of a separate investigation by the European Union. The EU is not formally investigating Microsoft’s Azure cloud computing platform, but has been assessing complaints from companies such as France’s OVHCloud about Microsoft’s licensing terms.