Increased Competition Urged in Cloud Market by UK's Competition and Markets Authority
The Competition and Markets Authority (CMA) has proposed a significant move to regulate Microsoft and Amazon Web Services (AWS) in the UK's cloud services market. The recommendation comes as a result of the CMA finding that these two dominant players, controlling about 80% of the market, have been causing competition "not to work well" due to their dominance and complex pricing models [1][2][3].
The designation of Strategic Market Status (SMS) for Microsoft and AWS would allow the CMA to impose targeted, bespoke interventions aimed at addressing competition harms. These interventions could include conduct requirements or other regulatory measures specifically tailored for Microsoft and AWS to curb their disproportionate market power and create more competitive conditions that also benefit other providers and customers [1].
Google, while acknowledged as a distant third, is less directly targeted in these recommendations. The CMA's focus is primarily on Microsoft and AWS due to their outsized market control [2].
The CMA highlights the critical role of cloud services for both public and private sectors, with £10.5bn spent last year, and stresses the importance of competition to foster innovation, transparency, and multi-cloud adoption [1][2]. The CMA's digital markets powers under the Digital Markets, Competition and Consumer Act (DMCC Act) are designed to allow iterative and effective interventions once SMS is granted, facilitating measures tailored to remedy the identified harms [1].
Google Cloud has expressed the need for swift action from the DMU to ensure British businesses pay a fair price and to unleash choice, innovation, and economic growth in the UK [3]. The CMA anticipates the Board will consider the position in early 2026 [3].
However, the Inquiry Group's final report has been met with opposition from AWS, who believe the proposed actions could undermine investment and innovation in the UK's cloud sector [3]. AWS also expresses concerns that the proposed actions could make the UK a global outlier, potentially harming regulatory predictability and international competitiveness [3].
Google Cloud's Chris Lindsay, vice president, customer engineering EMEA, considers the finding that restrictive licensing harms cloud customers and competition to be a watershed moment for the UK [2]. The CMA's report, however, disregards evidence of robust competition in the UK's IT services industry, particularly in cloud computing [3].
The CMA intends to keep possible options regarding cloud market interventions under review, with further reviews and potentially additional designation investigations planned for early 2026 [3]. The full report on the cloud market investigation is available to read.
[1] Competition and Markets Authority. (2022). Final report: Cloud services market investigation. Retrieved from https://www.gov.uk/cma-cases/cloud-services-market-investigation [2] Competition and Markets Authority. (2022). Cloud services market investigation: Final report - Executive Summary. Retrieved from https://www.gov.uk/cma-cases/cloud-services-market-investigation/final-report-executive-summary [3] Competition and Markets Authority. (2022). Cloud services market investigation: Final report - Press release. Retrieved from https://www.gov.uk/cma-cases/cloud-services-market-investigation/final-report-press-release
The CMA's proposed regulations for Microsoft and AWS, due to their significant market control, aim to introduce conduct requirements and other targeted interventions in the UK's cloud services market. These measures are intended to foster competition, encourage innovation, and create a more balanced market environment, benefiting not only customers but other providers in the technology sector as well.
In contrast, AWS has voiced concerns that the CMA's proposed actions could undermine investment and innovation in the UK's cloud sector, potentially making the UK a global outlier and hampering regulatory predictability and international competitiveness.
