The UK’s antitrust watchdog is investigating Amazon and Microsoft’s cloud services over concerns that the companies are unfairly using their market power. 

The UK’s Competition and Markets Authority (CMA) is opening a probe into the two firm’s UK supply of public cloud infrastructure. 

The investigation comes after a year-long study by UK telecoms regulator Ofcom which found “features that make it more difficult for UK businesses to switch and use multiple cloud suppliers”.

“We are particularly concerned about the position of the market leaders Amazon and Microsoft,” Ofcom said. 

The CMA has been butting heads with Microsoft for the majority of this year over the tech giant’s £55bn acquisition of Activision Blizzard and could now be locked into a fresh battle over its cloud services. 

Ofcom’s statement added: “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.”

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By GlobalData

The cloud sphere, online infrastructure that provides firms and individuals with applications and storage without the need for hardware or software, is an incredibly lucrative market. 

According to Ofcom’s study, Amazon Web Services (AWS) and Microsoft’s Azure held a combined UK market share of 70% to 80% in 2022. 

“The cloud is the foundation of our digital economy and has transformed the way companies run and grow their businesses,” Fergal Farragher, Ofcom’s director involved in the market study, said.

“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,” he added.

Alex Haffner, competition partner at UK law firm Fladgate, told Verdict that it’s both an interesting and sensible decision that Ofcom turned to the CMA to launch the investigation.

This suggests “that the regulators perceive there to be structural issues with the cloud computing market that need broader investigation and consideration,” Haffner said.

“It is also a sensible approach given the wide ranging impact that the cloud computing market has on many different industries and the broader economy, and fits with the CMA’s stated desire to target effective competition in digital markets,” Haffner added.

The news comes after Microsoft recently announced a partnership with Oracle, a US-based technology company and the third-largest software company in the world in 2020.

Oracle Database@Azure, will bring Oracle database services running on Oracle hardware to Azure data centers in the cloud.

According to Oracle, it is designed to marry Oracle’s database product with the “security, flexibility and best-in-class services” of Azure.

Research company GlobalData believes this is a step towards what cloud clients are wanting from their services.

“Clients are pressing cloud providers, especially hyperscalers, to streamline all aspects of procurement and management of workloads in their environments,” according to the report published in September.

“Enterprise customers are also demanding better cost management and improved security and greater support for regulatory requirements,” it added.