Amazon and Microsoft supremacy in UK cloud market faces probe by competition watchdog

investmentweek.co.uk:

Market leaders Amazon and Microsoft had a combined market share of 70-80% in 2022.

The referral comes from Ofcom, the communications regulator, which has already found problems from its own review of the workings of the cloud computing market.

Ofcom's probe uncovered practices that could limit competition, and it is «particularly concerned» about the role of market leaders Amazon, which provides cloud services via its Amazon Web Services (AWS) arm, and Microsoft, which had a combined market share of 70-80% in 2022, with Google their closest competitor, at 5-10%. 

«High levels of profitability for the market leaders AWS and Microsoft indicate there are limits to the overall level of competition,» Ofcom said.

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Ofcom found issues including high fees for transferring data out, committed spend discounts and technical restrictions, all of which the telecoms regulator said make it difficult for business customers to switch cloud provider or use multiple providers.

Ofcom found Amazon, Microsoft and Google set transferring out fees, so-called ‘egress fees', at «significantly higher rates than other providers», which could put businesses off switching.

«If left unchecked, competition could deteriorate in a critical digital market for the UK economy,» Ofcom said.

Its concerns have now been sent to the Competitions and Markets Authority to conduct an independent investigation to decide whether there is an adverse effect on competition, and, if so, whether it should take action.

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Fergal Farragher, Ofcom's director responsible for the market study, said: «Some UK businesses have told us they are