UK to investigate Amazon, Microsoft cloud for illegal practices, abusing market position

Amazon and Microsoft are under investigation by the UK’s antitrust authority, which is concerned that these US tech giants might be using their market dominance unfairly. The UK’s telecom regulator, Ofcom, announced on Thursday that it has requested the Competition and Markets Authority to conduct a formal investigation.

Ofcom’s year-long study revealed that Amazon and Microsoft have made it challenging for customers to use different cloud providers or switch between them, even though cloud services are increasingly important for businesses.

According to Fergal Farragher, the director at Ofcom who oversaw the study, some UK businesses have expressed concerns about the difficulty of changing or mixing cloud providers. They also raised doubts about whether competition is functioning effectively in this space. Ofcom pointed out issues related to the fees for moving data out of the cloud, the lack of compatibility between different providers, and pricing strategies that might discourage customers from exploring alternatives.

Last year, Ofcom initiated an inquiry into concerns that “hyperscale” cloud providers like Amazon’s AWS and Microsoft’s Azure could stifle innovation and hinder market growth. These two companies account for a significant portion of the UK’s public cloud infrastructure market revenue, with Google Cloud contributing around 5% to 10%.

Investigations conducted by the Competition and Markets Authority typically take about 18 months, and if significant issues are identified, the authority can impose remedies, such as requiring companies to sell off certain parts of their business to promote competition.

It’s worth noting that the European Union has also been looking into complaints about the cloud industry, particularly related to potential antitrust violations by Microsoft. Germany’s Federal Cartel Office, for instance, launched its own investigation into Microsoft’s market power earlier this year, citing the growing significance of Microsoft’s cloud services.