Dominance of Amazon, Microsoft in cloud harming competition, UK says

LONDON, July 31 — The dominant position of Amazon and Microsoft in cloud computing is harming competition, with their impact exacerbated by technical and commercial barriers to switching, according to an inquiry group from the United Kingdom’s (UK) antitrust regulator.

On Thursday, the Competition and Markets Authority (CMA) inquiry group said the regulator should investigate whether to designate the two with strategic market status (SMS) in cloud services, which would give it new powers to intervene.

However, it noted that the CMA has said it will not consider launching SMS investigations, which are conducted by its Digital Markets Unit (DMU), until early next year.

Microsoft was singled out in the report for licensing practices that the panel said adversely impacted Amazon Web Services and Google.

In January, the inquiry group said that Microsoft was using its dominance in enterprise software, like Windows Server and Microsoft 365, to limit competition by charging licensing fees when its services were used on rival platforms.

Google is the third main cloud services provider, but it has a much smaller share than its rivals.

Microsoft said the report “misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment, and rapid, AI-driven changes”.

“Its recommendations fail to cover Google, one of the fastest-growing cloud market participants,” a spokesperson said, adding it looked forward to working with the DMU toward an outcome that more accurately reflected competition in cloud.

Amazon also said “clear evidence of robust competition” had been disregarded.

“The action proposed by the Inquiry Group is unwarranted and undermines the substantial investment and innovation that have already benefited hundreds of thousands of UK businesses.

“It risks making the UK a global outlier at a time when businesses need regulatory predictability for the UK to maintain international competitiveness,” a spokesperson said.

But Google said the conclusive finding that restrictive licensing harmed cloud customers and competition was a “watershed moment”.

“Swift action from the DMU is essential to ensure British businesses pay a fair price and to unleash choice, innovation and economic growth in the UK,” said Google Cloud’s vice president for customer engineering EMEA Chris Lindsay.

— Reuters