UK Regulator Launches Cloud Market Investigation Amid Concerns on Practices of Amazon, Microsoft -- Update

By Kyle Morris

The U.K.'s Office of Communications said Wednesday that it is proposing a cloud market investigation as a study by the regulator has uncovered practices and features that could limit competition, and that it is particularly concerned about the practices of Amazon and Microsoft because of their dominant market position.

The regulator said competition could deteriorate further in a critical digital market for the U.K. economy if left unaddressed. High fees for transferring data out, committed spend discounts and technical restrictions are making it hard for business customers to switch cloud provider or use multiple providers, it said.

Areas for concern include egress fees, technical restrictions on interoperability and committed spend discounts.

In the U.K., Amazon Web Services and Microsoft have a combined market share of 60%-70% and Google is their closest competitor with 5%-10%, Ofcom said.

"We've done a deep dive into the digital backbone of our economy, and uncovered some concerning practices, including by some of the biggest tech firms in the world," Ofcom's director responsible for the market study Fergal Farragher said. "High barriers to switching are already harming competition in what is a fast-growing market. We think more in-depth scrutiny is needed, to make sure it's working well for people and businesses who rely on these services," he added.

Ofcom said it has proposed to refer the cloud infrastructure market to the Competition and Markets Authority to carry out an investigation.

"These are interim findings and AWS will continue to work with Ofcom ahead of the publication of its final report," an Amazon Web Services spokesperson said to The Wall Street Journal.

"We look forward to continuing our engagement with Ofcom on their cloud services market study," a spokesperson for Microsoft told the Journal. "We remain committed to ensuring the UK cloud industry stays highly competitive, and to supporting the transformative potential of cloud technologies to help accelerate growth across the UK economy."

Feedback on the interim findings is being invited by May 17 and Ofcom plans to publish a final report by no later than Oct. 5.

Write to Kyle Morris at kyle.morris@dowjones.com

(END) Dow Jones Newswires

April 05, 2023 05:44 ET (09:44 GMT)

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