British regulator prepares competition remedies for cloud market

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British regulator prepares competition remedies for cloud market

Ofcom said it received evidence showing

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makes it less attractive for customers to run its Office productivity apps on cloud infrastructure other than

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Azure.

Igor Golovniov | Sopa Images | Lightrocket via Getty Images

LONDON — Britain’s competition regulator is preparing remedies aimed at solving competition issues in the multibillion-pound cloud computing industry.

The Competition and Markets Authority is set to unveil its provisional decision detailing “behavioral” remedies addressing anti-competitive practices in the sector following a months-long investigation into the market, two sources familiar with the matter told CNBC.

The sources, who preferred to remain anonymous given the investigation’s sensitive nature, said that the cloud market remedies could be announced within the next two weeks. The regulator previously set itself a deadline of November to December 2024 to publish its provisional decision.

A CMA spokesperson declined to comment on the timing of its provisional decision when asked by CNBC.

Cloud infrastructure services is a market that’s dominated by U.S. technology giants

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and

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.

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is the largest player in the market, offering cloud services via its

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Web Services (AWS) arm.

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is the second-largest provider, selling cloud products under its

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Azure unit.

The CMA probe traces its history back to 2022, when U.K. telecoms regulator Ofcom kicked off a market study examining the dominance of cloud giants

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,

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and

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. Ofcom subsequently referred its cloud review to the CMA to address competition issues in the market.

Why is the CMA concerned?

Among the key issues the CMA is expected to address with recommended behavioral remedies, are so-called “egress” fees charging companies for transferring data from one cloud to another, licensing fees viewed as unfair, volume discounts, and interoperability issues that make it ******* to switch vendor.

According to one of the sources, there’s a chance

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may be excluded from the scope of the competition remedies given it is smaller in size compared to market leaders AWS and

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Azure.

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and

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declined to comment on this story when contacted by CNBC.

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did not immediately return a request for comment.

What could the remedies look like?

The CMA has said previously in June that it was more minded toward considering behavioral remedies to resolve its concerns as opposed to “structural” remedies, such as ordering divestments or operational separations.

The watchdog said in a

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in June that it was “at an early stage” of considering potential remedies.

Solutions floated at the time included imposing price controls restricting the level of egress fees, lowering technical barriers to switching cloud providers, and banning agreements encouraging firms to commit more spend in return for discounts.

One contentious measure the regulator said it was considering was requiring

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to apply the same pricing for its productivity software products regardless of which cloud they’re hosted on — a move that would have a significant impact on

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’s pricing structures.

CMA Chief Executive Sarah Cardell is set to hold a speech on Thursday at Chatham House, a U.K. policy institute. In an

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with the Financial Times, she defended the regulator’s track record on competition enforcement amid criticisms from Prime Minister Keir Starmer that the agency was holding back growth.

She is expected to outline plans for a review in 2025 into whether the CMA should more frequently use behavioral remedies when approving deals, the FT reported.

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