AWS and Microsoft could face ‘targeted intervention’ from CMA over UK cloud competition concerns

[Pelican Press 0]

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AWS and

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could face ‘targeted intervention’ from CMA over *** cloud competition concerns

The competition watchdog has published the provisioning findings from its long-running investigation into the inner workings of the *** cloud infrastructure services market, which shows that competition in the sector is not working as well as it could be. For this reason, Kip Meek, chair of the CMA’s independent inquiry group, said it is advising the regulator to “consider investigating the largest cloud service providers using its new digital markets powers”.

This is because its findings suggest end-user organisations could be paying more than they need for cloud services, and are possibly at risk of being locked into using platforms that do not meet their “evolving” needs.

In a seven-page report, detailing the provisional findings of its investigation, the CMA said the lack of competition in the cloud market could mean *** customers are collectively paying hundreds of millions more per year than they need to for services.

It went on to state that *** cloud users can be locked into their “initial choice of provider” due to technical and commercial barriers that prevent customers from seeking out the services of other cloud suppliers who might have better-priced or a more innovative portfolio of services.

“We have provisionally found that AWS and

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have been generating sustained returns from their cloud services substantially above their cost of capital in cloud services for a number of years,” the report said. “Customers say that cloud services offer both quality and innovation to them. However, we consider that a more competitive market would have sustained better market outcomes, including more consistently competitive prices, as well as further improvements in quality and innovation.”

Controversial licensing practices

The report also called out

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’s controversial licensing practices, which typically see it charging customers more for running its software in its competitors’ cloud, as impacting on the competitive position of AWS and also

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by “partially foreclosing” them from the market.

As well as being in-scope of the CMA probe,

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’s behaviour on this front is also the subject of a European Commission complaint, filed by

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in September 2024.

“[The licensing piece] exacerbates the harm we have provisionally found arising from high market concentration and barriers to entry and expansion in relation to

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’s significant unilateral market power,” the report added.

To remedy the situation, the report suggests the CMA board should use powers conferred on it through the roll-out of the Digital Markets, Competition and Consumers Act 2024 (DMCCA) on 1 January 2025 to mark AWS and

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out as suppliers with “strategic market status”.

This would mean the CMA could impose legally binding conduct requirements or pro-competition interventions on both firms to limit and remedy the toll their activities have allegedly had on the market.

As detailed in the report, such powers are “specifically designed to be effected in digital markets … that share a combination of characteristics that can cause them to ‘tip’ in favour of one or a few firms” by allowing the CMA to take a “targeted and iterative” approach to tackling the behaviour of such providers.

“We consider that measures aimed at AWS and

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would address market-wide concerns by directly benefiting the majority of *** customers and producing wider, indirect effects by altering the competitive conditions or other providers,” the report stated.

Before any action can be taken by the CMA, a consultation on the provisional findings of its investigation needs to take place, with cloud market stakeholders now invited to share their feedback on the conclusions raised so far. The final report from the CMA’s investigation is due to drop by 4 August 2025.

In the meantime, AWS has responded to the CMA’s provisional findings by describing its proposed intervention under the terms of the DMCCA as “not warranted”, and urged it to think about the long-term impact of such a move.

“We urge the CMA to carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the ***,” a spokesperson for AWS said. “We will continue to work constructively with the CMA as they work on their final report.”

Rima Alaily, corporate vice-president and deputy general counsel in the competition law group at

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, seemed to suggest in a statement to Computer Weekly that the contents of the CMA report are mistargeted. 

“The draft report should be focused on paving the way for the ***’s AI-powered future, not fixating on legacy products launched in the last century,” she said. “The cloud computing market has never been so dynamic and competitive, attracting billions in investments, new entrants and rapid innovation. What could be better for *** businesses and government?”

Meanwhile, Chris Lindsay, vice-president of customer engineering for Europe, the Middle East and Africa at

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Cloud, said the company was pleased to see the impact that restrictive licensing practices have on cloud customers feature in the CMA’s provisional findings.  

“Restrictive licensing harms *** cloud customers, threatens economic growth and stifles innovation, and we are encouraged that the CMA has recognised the harm of these practices,” he said.

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#AWS #

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#face #targeted #intervention #CMA #cloud #competition #concerns

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