UK media regulator Ofcom on Thursday referred the public cloud infrastructure services market to the Competition and Markets Authority (CMA) for an independent investigation to further examine US tech giants Amazon and Microsoft’s dominance of the cloud market in the country.
In its market study, Ofcom identified a number of features in the supply of cloud services that make it more difficult for customers to switch and use multiple cloud suppliers.
Ofcom has estimated that the market for cloud services in the UK was worth up to 7.5 billion pounds in 2022.
“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny. This is a 7.5 billion pounds market that underpins a whole host of online services — from social media to AI foundation models,” said Sarah Cardell, CEO of the CMA.
The features which Ofcom is most concerned about are charges that cloud customers must pay to move their data out of the cloud.
The media regulator is also concerned about discounts which may incentivise customers to use only one cloud provider and technical barriers to switching, which may prevent customers from being able to switch between different clouds or use more than one provider.
The Ofcom study found that Amazon Web Services (AWS) and Microsoft had a combined market share of supply by revenue in the UK public cloud infrastructure services market of 70-80 per cent in 2022.
“The CMA’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and if not, what action should be taken to address any issues it finds,” said Cardell.
The CMA has appointed independent panel members to an inquiry group, who will act as the decision makers on this investigation.
The CMA will conclude its investigation by April 2025.