It turns out that Amazon's AWS and Microsoft's Azure are being investigated by a British government agency for violating antitrust laws, alleging that they are 'deliberately making it difficult to switch between clouds.'
Companies such as Amazon and Microsoft offer their own cloud computing services
Amazon's cloud computing services, Amazon Web Services (AWS) and Microsoft's Azure , have maintained large market shares in the industry. However, allegations have been raised that AWS and Azure may be violating antitrust laws, and in response, the UK Competition and Markets Authority (CMA) has launched an investigation.
CMA launches market investigation into cloud services - GOV.UK
https://www.gov.uk/government/news/cma-launches-market-investigation-into-cloud-services
UK regulator launches antitrust probe into Microsoft and Amazon cloud services | Network World
Ofcom refers to UK cloud market to CMA for investigation - Ofcom
Cloud Computing Monopolies Challenged: UK Regulator Takes on Tech Giants
https://www.linkedin.com/pulse/cloud-computing-monopolies-challenged-uk-regulator-takes-hansford
In April 2023, Ofcom, the UK's communications regulator, claimed that AWS and Azure 'are hindering competition in the market for cloud computing services and maintaining their dominance by making it difficult to switch between clouds.'
According to an Ofcom survey, AWS and Azure account for approximately 60-70% of the UK's cloud computing services market share, far ahead of the runner-up, Google's cloud computing service, Google Cloud Platform (GCP), which has a market share of 5-10%.
Ofcom cited 'high data charges,' 'limited interoperability,' and 'committed use discounts' as concerns about AWS and Azure's monopoly in the UK cloud computing services market.
Regarding 'high data charges,' Ofcom points out, 'Major cloud computing services like AWS and Azure charge customers significantly more for data transfers from the cloud than their competitors. These high data charges make it difficult for customers to subscribe to multiple services at the same time or to switch from one service to another.'
Regarding 'interoperability limitations,' the report states, 'When switching between providers, such as from AWS to Azure, the process becomes extremely difficult because each provider has its own system. This lack of interoperability leads to customer lock-in and hinders competition by making it difficult to migrate to other services.'
Furthermore, Ofcom points out that 'committed use discounts' such as AWS's Compute Savings Plans, which allow customers to reduce their final cost of using a service by signing a long-term one- or three-year contract for consistent computing usage, may constitute anti-competitive behaviour by making it difficult for customers to switch to other companies' services.
Fergal Faragher, Ofcom's director of market research, said: 'Some UK businesses are concerned about switching cloud computing service providers or finding the cheapest combination of services, which raises questions about whether competition in the market is working well. We are therefore appealing to the CMA to investigate further the current state of the UK cloud computing services market and are working to ensure that business customers can continue to benefit from the right cloud computing services.'
Ofcom commissioned the CMA to conduct a market investigation on October 5, 2023. In response, the CMA launched an investigation into whether there are any competition concerns about AWS and Azure, and if so, what measures could be taken to ensure that they provide adequate services to UK customers.
CMA CEO Sarah Cardell said: 'The CMA very much welcomes Ofcom's request for our investigation. 'Cloud computing services power many online services in the UK, from using social media to developing AI models, generating £7.5 billion in revenue. With so many businesses in the UK relying on cloud services, it is vital that there is adequate and effective competition in this market.'
'We are not convinced by the findings of Ofcom's preliminary investigation. Ofcom appears to have misunderstood the services and discounts we offer,' Amazon spokesman Harry Streit said. 'While the CMA and Amazon will cooperate with each other in their investigation, any unwarranted interference could cause unintended harm to customers and competition.'
The CMA investigation is scheduled to begin on October 5, 2023, and run until April 4, 2025.
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