Ofcom has proposed referring the UK cloud market to the Competition and Markets Authority (CMA) for further investigation amid concern about the practices of leading cloud infrastructure providers Amazon (AWS) and Microsoft.

The UK telecom and media regulator said that a probe into the UK cloud services has “provisionally identified features and practices that make it more difficult for customers to switch and use multiple cloud suppliers. We are particularly concerned about the practices of Amazon and Microsoft because of their market position.”


Ofcom have suggested referring the UK cloud market to the Competition and Markets Authority (CMA)

Ofcom noted that cloud computing has become critical for many businesses across the economy – including telecoms companies, broadcasters and public sector organisations.

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In October, the regulator launched a study under the Enterprise Act 2002 into cloud infrastructure services in the UK to assess how well the market is working.

Ofcom said that it has concluded that ‘hyperscalers’ Amazon Web Services (AWS) and Microsoft have a combined market share of 60-70%. Google is their closest competitor with a share of 5-10%.

Ofcom said that while competitive market forces are delivering benefits to customers, some features of the market give cause for concern:

  • Egress fees. These are the charges that customers pay to transfer their data out of a cloud and the hyperscalers set them at significantly higher rates than other providers. The cost of egress fees can discourage customers from using services from more than one cloud provider or to switch to an alternative provider.
  • Technical restrictions on interoperability. These are imposed by the leading firms that prevent some of their services working effectively with services from other providers. This means customers need to put additional effort into reconfiguring their data and applications to work across different clouds.
  • Committed spend discounts. These can benefit customers by reducing their costs, but the way these discounts are structured can incentivise customers to use a single hyperscaler for all or most of their cloud needs, even when better quality alternatives are available.

Fergal Farragher, Ofcom’s director responsible for the market study, said:We’ve done a deep dive into the digital backbone of our economy, and uncovered some concerning practices, including by some of the biggest tech firms in the world. High barriers to switching are already harming competition in what is a fast-growing market. We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services.”

Ofcom is now inviting feedback on its interim findings, and on its proposal to make a market investigation reference into the supply of cloud infrastructure services in the UK.

The regulator intends to publish a final report setting out its findings and recommendations, including its decision on a market investigation reference, by no later than 5 October 2023.

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