UK regulator to probe cloud dominance of Amazon, Microsoft and Google

3 days ago

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If competition concerns are identified, Ofcom may take action to loosen the grip of the hyperscalers.

The UK’s communications regulator is examining the position of Amazon, Microsoft and Google in the cloud services market, with the aim of identifying any potential competition concerns.

Ofcom announced plans today (22 September) to investigate the world’s biggest tech companies to ensure their dominance in areas such as cloud computing, messaging and smart devices does not negatively impact people and businesses in the UK.

The first market study will look at the largest providers of cloud services in the UK.

The regulator said that hyperscalers Amazon Web Services (AWS), Microsoft and Google collectively generate around 81pc of revenue in the UK’s £15bn public cloud infrastructure services market.

“Our study will formally assess how well this market is working,” it added. “We will examine the strength of competition in cloud services generally and the position the three hyperscalers hold in the market.

“We will also consider any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share.”

If competition concerns are identified, Ofcom said it may take further action. This could include recommendations for changing UK regulations or policy, taking competition enforcement action, or making an investigation reference to the Competition and Markets Authority.

Paul Stone, senior counsel at law firm Charles Russell Speechlys, said that the cloud market probe is “indicative of increasing scrutiny being placed on the Big Tech sector” by UK regulators.

“The market study may act as a catalyst for a full-blown market investigation, which could have a significant impact on Big Tech firms.”

The announcement has been welcomed by many in the cloud space. Mark Boost, CEO of cloud-native service provider Civo, said it could be the start of a process “to create a fairer and more competitive cloud market”.

“For far too long, the big three cloud providers have dominated the market without necessarily delivering for their users,” he added.

“We have reached a point where IT teams view choosing AWS or Azure or Google Cloud as the only option for their organisation, hooked in by the scale and sheer amount of services on offer.”

Messaging and smart devices

Over the next year, Ofcom will also examine other digital markets including communication apps and personal assistants.

The regulator said it is interested in how services such as WhatsApp, FaceTime and Zoom are affecting traditional messaging, and how competition may evolve in this area in the coming years.

It will also focus on the nature and intensity of competition when it comes to personal assistants and other smart devices through which people access TV, radio and online content.

Selina Chadha, Ofcom’s director of connectivity, said that the way we live, work, play and do business “has been transformed by digital services”.

“But as the number of platforms, devices and networks that serve up content continues to grow, so do the technological and economic issues confronting regulators.

“That’s why we’re kick-starting a programme of work to scrutinise these digital markets, identify any competition concerns and make sure they’re working well for people and businesses who rely on them.”

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Sarah Harford is sub-editor of Silicon Republic

editorial@siliconrepublic.com