Investigation Opened for UK Cloud Services Industry

The Competition and Marketing Authority (CMA) in the UK has opened an investigation into the UK cloud computing industry following a study and recommendations by Ofcom. The CMA will examine current practices and assess if there are any competition concerns.

The study focused on the industry and practices related to cloud infrastructure services, an industry that was worth between £70 and £75 billion in 2022. Ofcom completed and published its findings in early October, raising a number of concerns and ultimately deciding to “refer the UK public cloud infrastructure services market to the Competition and Markets Authority (CMA).”

Issues under scrutiny included the fees that customers must pay to move data out of the cloud, technical barriers to using competing cloud systems, and commercial discounts to encourage customers to stay with a single provider.

Ofcom claims that these practices discourage users from changing platforms or working with multiple platforms, making it “less attractive to use rival providers as part of a multi-cloud strategy.”

In 2022, Amazon Web Services (AWS) and Microsoft combined had between 70% and 80% of the total market share in the UK. Google was in third place with between 5% and 10% of the UK market share.

These outcomes raise the risk that consumers will start paying higher prices or have reduced access to innovative products. It will also reduce access for new entrants to build and grow in the industry.

CMA CEO Sarah Cardell says, “The CMA’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and if not, what action should be taken to address any issues it finds.”

The CMA has created an inquiry group and assigned independent panel members who will act as the decision makers. The group will publish a statement defining the proposed focus of the investigation, though the exact date is unknown. The CMA intends to conclude its investigation in April 2025.

Ofcom is a regulator for communications services in the UK. It is an independent agency, funded by fees paid by the companies it regulates and receives its direction from Parliament.