An investigation is being launched by the UK competition regulator into the suppliers of public cloud infrastructure.
The Competition and Markets Authority’s (CMA) inquiry is being carried out following the result of a study by the communications body Ofcom, which discovered problems for customers looking to switch cloud provider or use multiple services.
Sarah Cardell, CEO of the CMA, said: “This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”
Migration fees, loyalty discounts and practical issues when moving or implementing different cloud services are the main areas of worry for Ofcom.
Ofcom’s study also raised concerns about software licensing practices of cloud providers, “in particular Microsoft”.
Microsoft was forced by the CMA to give up Activision’s cloud gaming rights in its proposed $69bn (£56.9bn) merger, with the deal going to Ubisoft instead.
Alex Haffner, competition partner at law firm Fladgate said the move by the regulator is a “sensible approach” due to the cloud’s importance in various markets and wider economy.
“That Amazon and Microsoft are the largest players on this market raises the stakes somewhat, although compared with recent skirmishes with Microsoft in particular, the fact that a market investigation can take 18-24 months overall means that this one will likely take on a more considered path..”
A spokesperson for Amazon Web Services told UKTN it does charge exit fees when moving to a different cloud provider, with more than 90% not paying due to the allocation of free data each month.
“We disagree with Ofcom’s findings and believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer,” added the Amazon Web Services representative.
“Any unwarranted intervention could lead to unintended harm to IT customers and competition. Amazon Web Services will work constructively with the CMA.”
The CMA public cloud infrastructure inquiry is expected to finish by April 2025.