AWS, Microsoft Push Back Against Plans to Refer UK Cloud Market to Competition Regulator

Ofcom’s investigation identified practices that make it “difficult for customers to switch and use multiple cloud suppliers.”

Christine Horton, Contributing Editor

July 10, 2023

6 Slides
UK cloud market regulation

Amazon Web Services (AWS) and Microsoft are pushing back against plans to refer the UK cloud market to the Competition and Markets Authority (CMA).

AWS has claimed the “regulatory interventions proposed would be unwarranted, and could lead to significant unintended harm to customers and competition.”

AWS and Microsoft Dominate UK Cloud Market

In April, UK communications regulator Ofcom accused the cloud giants of stifling innovation within the £15 billion (US $16.9 billion) UK cloud market. It said it had “identified features and practices that make it more difficult for customers to switch and use multiple cloud suppliers.”

It singled out the practices of AWS and Microsoft, due to their market dominance. The pair have a combined market share of 60-70% in the UK.

Ofcom highlighted three areas of concern:

  • Egress fees: Ofcom found the hyperscalers set these charges at significantly higher rates than other providers. The cost of egress fees can discourage customers from using services from more than one cloud provider or switch to an alternative provider.

  • Technical restrictions on interoperability: Imposed by the leading firms, the regulator said these prevent some of their services working effectively with services from other providers. This means customers need to put additional effort into reconfiguring their data and applications to work across different clouds.

  • Committed spend discounts: The regulator noted these can benefit customers by reducing their costs; however, it found that the way the discounts are structured can incentivize customers to use a single hyperscaler for all or most of their cloud needs, “even when better quality alternatives are available.”

Cloud Providers Fighting Back

Ofcom invited feedback on its interim findings, and its proposal to refer the UK cloud market to the CMA.

That feedback is now in – and the cloud providers are arguing back. AWS said that the UK economy has “benefited from robust competition among IT providers.”

AWS’ full response to the proposal is 14 pages in length – with Microsoft’s running to a whopping 58 pages. Here, we have summarized what it said, plus that of the other big IT and cloud players, like Microsoft, Google, BT and Tech UK. See the slideshow above for more.

Want to contact the author directly about this story? Have ideas for a follow-up article? Email Christine Horton or connect with her on LinkedIn.

 

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About the Author(s)

Christine Horton

Christine Horton

Contributing Editor, Channel Futures

Christine Horton writes about all kinds of technology from a business perspective. Specializing in the IT sales channel, she is a former editor and now regular contributor to leading channel and business publications. She has a particular focus on EMEA for Channel Futures.

See more from Christine Horton
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