The UK’s competition and markets authority (CMA) has announced its intentions to investigate Amazon and Microsoft’s domination of the UK’s cloud services market, which was worth as much as £7.5 billion in 2022.
According to media watchdog Ofcom, the two companies control between 70% and 80% of the UK’s cloud services market – in contrast, closest rival Google controls somewhere between 5-10%. Ofcom referred its findings to the CMA for further investigation.
Speaking to the BBC, Amazon and Microsoft both announced that they work with the CMA to reach a resolution, however an Amazon spokesperson stated that Ofcom’s concerns were “based on a fundamental misconception” of how the cloud services sector works.
Stormy clouds
This isn’t the first time that the CMA has found reason to criticise Microsoft’s cloud business. The group recently blocked Microsoft’s acquisition of Activision Blizzard on the grounds that it would give the company an unassailable monopoly in the UK’s cloud gaming market. This led to the company selling the cloud gaming rights to Activision Blizzard’s catalogue to rival Ubisoft, clearly sending the message that the company is less concerned with the sector than mobile or console. After all, Microsoft repeatedly nixed cutting Activision Blizzard’s console interests out of the equation, with president Brad Smith stating “we don’t think it’s realistic that one part of this company can be carved out from the rest.”
“Many businesses now completely rely on cloud services, making effective competition in this market essential,” said CMA chief executive Sarah Cardell. “Strong competition ensures a level playing field so that market power doesn’t end up in the hands of a few players – unlocking the full potential of these rapidly evolving digital markets so that people, businesses, and the UK economy can get the maximum benefits
“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 is due to complete its investigation by April 2025. Depending on its findings it could force Amazon and Microsoft to change their business practices, block purchases, or even sell off parts of their businesses should it find that either poses a legitimate threat of a monopoly.
“We are committed to ensuring the UK cloud industry remains innovative, highly competitive and an accelerator for growth across the economy,” said a Microsoft spokesperson. “We will engage constructively with the CMA as they conduct their Cloud Services Market Investigation.”
Last week, it emerged that Microsoft is hoping to close its acquisition of Activision Blizzard as early as October 13.
