The competitors regulator is to research the dominance of Amazon and Microsoft within the UK’s cloud market.
It follows a research by the telecoms watchdog Ofcom which “identified features that make it more difficult for UK businesses to switch and use multiple cloud suppliers”.
Ofcom added: “We are particularly concerned about the position of the market leaders Amazon and Microsoft.”
The request for the investigation raises the prospect of a contemporary battle between the Competition and Markets Authority (CMA) and Microsoft after the pair locked horns over the tech agency’s £55bn takeover of Activision Blizzard.
“The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competition, and if so, whether it should take action or recommend others to take action,” Ofcom’s assertion continued.
It had beforehand expressed worries concerning the practices of Amazon Web Services (AWS) and Microsoft due to their market positions within the cloud sphere – on-line infrastructure that offers companies information functions and storage with out the necessity to purchase their very own {hardware} or software program.
Ofcom’s research discovered the pair had a mixed market share of 70% to 80% in 2022, with Google their closest competitor with a share of as much as 10%.
Issues of concern for the watchdog included so-called Egress charges – the fees that clients pay to switch their information out of a cloud.
Ofcom mentioned they had been set at “significantly higher rates” by the dominant gamers than different suppliers.
It additionally highlighted worries about dedicated spend reductions which, Ofcom feared, might incentivise clients to make use of a single main agency for all or most of their cloud wants.
“These market features can make it challenging for some customers to switch or use multiple cloud providers,” the regulator added.
“This can make it difficult to bargain for a good deal with their provider, or to mix and match the best quality services across different providers.
“High ranges of profitability for the market leaders AWS and Microsoft point out there are limits to the general degree of competitors.”
Amazon and Microsoft had been but to remark.
Read extra from enterprise:
Metro Bank plots capital increase to allay City considerations
Rent rises: Competition for properties hots up
Fergal Farragher, Ofcom’s director accountable for the market research, mentioned: “The cloud is the foundation of our digital economy and has transformed the way companies run and grow their businesses.
“From TV manufacturing and telecoms networks to AI improvements – all of this stuff depend on distant pc energy that goes unseen.
“Some UK businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud provider, and it’s not clear that competition is working well.
“So, we’re referring the market to the CMA for additional scrutiny, to verify enterprise clients proceed to learn from cloud providers.”
That inquiry is because of conclude by April 2025.
Source: information.sky.com”