Microsoft & Amazon’s Cloud Market Dominance Under Investigation

Amazon and Microsoft’s cloud offerings have come under scrutiny as competition regulators have expressed concerns over their dominance of the market.

The UK’s Competition and Markets Authority has provisionally found that competition in the sector “is not working” for consumers.

The CMA said that a lack of competition in cloud services was “likely to be leading to higher costs, less choice, less innovation and lower quality of service for businesses and organisations”.

“Microsoft is using its strong position in software to make it harder for Amazon Web Services and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud,” noted the CMA.

The authority has gone on to add that the Microsoft and Amazon – each of which controls a 40% share in the country’s cloud market – be investigated under recently introduced digital markets competition rules.

The new rules which have gone into effect from this month empower the CMA to promote competition in fast-moving digital markets.

The CMA can label large firms as having Strategic Market Status (SMS). To be labelled as such, the firm needs to have turnover of A$1.99 billion in the UK or A$49.73 billion globally, have substantial and entrenched market power, and also a position of strategic significance.

Designating a firm with an SMS label will allow the CMA to guide the behaviour of these firms and tackle conduct that could undermine fair competition, and also address specific competition problems arising from a firm’s market power in a particular digital activity.

“The draft report should be focused on paving the way for the UK’s AI-powered future, not fixating on legacy products launched in the last century,” said Rima Alaily, Microsoft’s deputy general counsel in its competition law group, according to Bloomberg.

The investigation “is not warranted,” an AWS spokesperson added in a statement. “We urge the CMA to carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the UK.”

A final decision on the case is due by August. Apart from Microsoft and Amazon, the CMA said this month that it would use the new digital markets competition rules to investigate Apple and Google’s position regarding their ‘mobile ecosystems’, which includes operating systems, app stores and browsers that operate on mobile devices.