The UK’s £7.5 billion cloud services market is to be the subject of a full investigation over concerns that Amazon and Microsoft are too dominant.
The Competition and Markets Authority said it would look into practices used by the tech giants and whether they unfairly disincentivise customers from using smaller providers.
It follows a market study into the sector by media watchdog Ofcom, which urged the CMA to investigate the major cloud providers more deeply.
Ofcom said it was concerned about high exit fees charged by cloud providers as well as interoperability barriers that have been artificially raised to make it hard to switch providers. As much as 80% of the cloud market is dominated by Amazon and Microsoft, it said.
Fergal Farragher, Ofcom’s director responsible for the market study, said: “The cloud is the foundation of our digital economy and has transformed the way companies run.
“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.”
The CMA said the licensing practices of Microsoft were of particular concern in its investigation. The tech giant has been accused of adding gratuitous restrictions to its software when used with a different cloud provider.
Francisco Mingorance, Secretary General at European cloud services trade body CISPE told the Standard: “For us it’s paramount that the CMA includes a full examination of the pernicious effect that these licencing practices have on customers and other cloud providers.”
“Monopolies like Microsoft are imposing unfair licensing practices. This is a recognition that this is problematic behaviour and it should be addressed. We would like the CMA to set some boundaries, some clear rules for the market.”
The cloud industry has become an area of increasing focus for the CMA.
Microsoft’s merger with Activision was initially blocked by the CMA but the regulator softened its stance after the firm agreed to sell its cloud streaming rights to be managed by a third party, Ubisoft.
