On Thursday, UK regulators initiated a competition probe into Microsoft, Google, and Amazon’s cloud computing practices. The investigation is based on a study by media watchdog Ofcom which forwarded its findings to the Competition and Markets Authority (CMA) to examine U.S. big tech companies’ competitive practices.
The UK government said in a press release that Ofcom’s study had “identified a number of features in the supply of cloud services that make it more difficult for customers to switch and use multiple cloud suppliers.” Amazon’s AWS, Microsoft, and Google were reportedly found to use “egress fees” which require Cloud users to pay the company to switch their data from one company to another and create technical barriers that stop users from switching to another company or using more than one Cloud provider.
Ofcom said in its study that it found Amazon’s AWS and Microsoft to be the leading Cloud infrastructure providers, holding a combined market share of 70% to 80% last year while Google was the closest competitor with a share of 5% to 10%. Although Ofcom reported there are some positives including product innovation, discounts, and a wide array of software services to choose from, it said in the study “that competition between cloud providers is mainly focused on attracting new customers when they first move into the cloud.”
In response to Ofcom’s findings, the CMA said it will investigate if action should be taken “so that people, businesses, and the UK economy can get the maximum benefits,” Sarah Cardell, CEO of the CMA, said in the press release. She added: “This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential.”
An Amazon spokesperson said in an emailed statement to Gizmodo that it disagrees with Ofcom’s findings, saying it does not charge egress fees for switching to another provider and added that the company reportedly only spends a small percentage of its IT on the cloud. The company claims it has made it “easier than ever” for customers to switch between cloud providers, and said it will “work constructively with the CMA, but believes that Ofcom’s findings “are based on a fundamental misconception of how the IT sector functions.”
The CMA has put together an independent panel to investigate Amazon, Microsoft, and Google’s competitive practices and will focus on the investigation over the next two years. UK regulators said in the press release that the CMA’s investigation will conclude in April 2025.
Microsoft and Google did not immediately respond to Gizmodo’s request for comment.