The competition watchdog in Britain is working on solutions to address competition concerns in the multibillion-pound cloud computing sector.
TakeAway Points:
- The UK competition watchdog will shortly unveil “behavioural” remedies to deal with anti-competitive activities in the cloud infrastructure sector.
- It is anticipated that the regulator will unveil suggested solutions to address what it perceives to be obstacles to competition in the industry, which is dominated by Microsoft and Amazon, American cloud titans.
- One of the sources claims that because Google is smaller than industry leaders AWS and Microsoft Azure, it may not be covered by the competition remedies laws.
Competition remedies
The Competition and Markets Authority is set to unveil its provisional decision detailing “behavioral” remedies addressing anti-competitive practices in the sector following a months-long investigation into the market, two sources familiar with the matter said.
The sources, who preferred to remain anonymous given the investigation’s sensitive nature, said that the cloud market remedies could be announced within the next two weeks. The regulator previously set itself a deadline of November to December 2024 to publish its provisional decision.
Cloud infrastructure services is a market that’s dominated by U.S. technology giants Amazon and Microsoft. Amazon is the largest player in the market, offering cloud services via its Amazon Web Services (AWS) arm. Microsoft is the second-largest provider, selling cloud products under its Microsoft Azure unit.
The CMA probe traces its history back to 2022, when U.K. telecoms regulator Ofcom kicked off a market study examining the dominance of cloud giants Amazon, Microsoft, and Google. Ofcom subsequently referred its cloud review to the CMA to address competition issues in the market.
Concerns from CMA
Among the key issues the CMA is expected to address with recommended behavioral remedies are so-called “egress” fees charging companies for transferring data from one cloud to another, licensing fees viewed as unfair, volume discounts, and interoperability issues that make it harder to switch vendor.
According to one of the sources, there’s a chance Google may be excluded from the scope of the competition remedies given it is smaller in size compared to market leaders AWS and Microsoft Azure.
Remedies in view
The CMA has said previously in June that it was more minded toward considering behavioral remedies to resolve its concerns as opposed to “structural” remedies, such as ordering divestments or operational separations.
The watchdog said in a working paper in June that it was “at an early stage” of considering potential remedies.
Solutions floated at the time included imposing price controls restricting the level of egress fees, lowering technical barriers to switching cloud providers, and banning agreements encouraging firms to commit more spend in return for discounts.
One contentious measure the regulator said it was considering was requiring Microsoft to apply the same pricing for its software regardless of which cloud it’s hosted on — a move that would have a significant impact on Microsoft’s pricing structures.
In a speech Thursday at U.K. policy thinktank Chatham House, CMA Chief Executive Sarah Cardell announced plans for a review in 2025 into the regulator’s approach to approving mergers.
In an interview with the Financial Times published earlier in the day, she defended the regulator’s track record on competition enforcement amid criticisms from Prime Minister Keir Starmer that the agency was holding back growth.
