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In a complaint to the U.K. regulator, AWS claims changes to Microsoft’s terms prevent customers switching to alternative cloud providers or running rivals’ services in a multicloud environment.
December 7, 2023
Britain’s Competition and Markets Authority (CMA) launched an investigation into the country’s cloud computing industry in October. It followed a referral from media regulator Ofcom that highlighted both Amazon's and Microsoft’s dominance of the market.
The initial Ofcom report cited egress fees, restrictions on interoperability and committed spend discounts as areas of concern to U.K. cloud users.
In a statement published on the CMA’s website Tuesday, AWS pointed to changes to Microsoft’s terms of services. Microsoft changed its licensing terms in 2019 and 2022 following complaints to EU competition regulators. However, these have done little to help customers switch to alternative cloud providers, or run competitors’ services in a multicloud environment, claimed AWS.
“To use many of Microsoft’s software products with these other cloud services providers, a customer must purchase a separate license even if they already own the software,” said AWS. “This often makes it financially unviable for a customer to choose a provider other than Microsoft.”
AWS cited a July 2023 study which found that requirements for customers to rebuy existing software licenses and use them in conjunction with cloud services resulted in an “estimated expenditure of approximately €560 million."
This, said AWS, is equivalent to an 80-100% price increase.
Last week, Reuters reported Google had submitted a similar letter to the watchdog. In it, it claimed Microsoft’s business practices had left its rivals at an unfair disadvantage.
Google made six recommendations to the CMA. These included forcing Microsoft to improve interoperability for customers using Azure. It also asked the CMA to ban Microsoft from withholding security updates from those that switch.
In response, Microsoft maintained the U.K.’s cloud computing market remained competitive.
“There are many sources of competition in the cloud market in the U.K. Google, Oracle, IBM and many other cloud players are also investing billions of pounds in cloud infrastructure globally to satisfy demand and are competing strongly for each customer workload where they operate,” it said.
Mark Boost, CEO of U.K. based cloud provider Civo, commented that the current situation with the cloud hyperscalers is “unsustainable.”
Civo's Mark Boost
“This public disagreement between the hyperscalers is nothing but a distraction from the big picture,” he said. “The fact remains that the status quo in the cloud market is unsustainable and anticompetitive. We cannot have a situation where businesses using the cloud are hemmed in with opaque pricing, dauntingly complex services and data egress fees that make it difficult to move to another provider.
“The CMA investigation can be a turning point for the U.K.," Boost continued. "We can start building an environment where any company can develop cutting-edge cloud services, and customers have the freedom to find the best solution for them.”
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.
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