The UK communications regulator Ofcom (Office of Communications) has proposed to refer Amazon and Microsoft to the Competition and Markets Authority (CMA) over concerns that they are harming competition in the cloud services market.
Amazon and Microsoft have a combined market share of 60-70% in the global cloud infrastructure market, while their closest competitor Google has just 10%. Ofcom says that some aspects of the cloud services market are highly concentrated and may create barriers to entry and expansion for potential rivals.
The regulator adds that cloud services are essential for many online activities and businesses, such as streaming, gaming, social media, e-commerce and banking. Ofcom adds it will work closely with the CMA to ensure that any investigation is conducted efficiently and effectively.
Ofcome says it is “particularly concerned about the practices of Amazon and Microsoft because of their market position”. After an investigation the regulator has “significant concerns” over the “behaviours by some providers that could raise barriers to switching and use of multiple providers”.
What Impact Will the Investigation Have
The implications of this probe for the cloud industry are not clear yet, but some possible outcomes are:
- The CMA could impose fines, remedies or divestments on Amazon and Microsoft if it finds that they have breached competition law.
- Recommendations could be made to the government on how to regulate the cloud services market more effectively.
- The probe could trigger more investigations by other regulators in the UK or abroad.
- Smaller cloud vendors could have more opportunities to grow their market share.
The CMA has a track record of taking tough action against tech giants that breach competition law, such as imposing fines on Google for abusing its dominance in online advertising. It has also conducted investigations into Apple's App Store and Facebook's use of data.
A Cloud AI War is Underway Amongst Top Providers
Microsoft Azure and Amazon Web Services (AWS) are the two leading cloud providers by market share. As AI becomes the prevalent technology across businesses, the two are entering an AI arms race to integration intelligent solutions into their cloud services.
Big Tech companies are entering an AI arms race that is seeing them leverage their cloud divisions to snap up artificial intelligence start-ups. As a consequence, regulator concerns are growing that Microsoft, Google, and Amazon will shut out smaller companies and harm competition.
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