"Criticizes Findings": Microsoft and AWS Criticize CMA's Report on Cloud Competition
In a recent report, the UK Competition and Markets Authority (CMA) has expressed concerns about the dominance of Microsoft and Amazon Web Services (AWS) in the UK cloud computing market. The two companies, each holding roughly 30-40% market share, have been accused of harming competition and creating significant barriers for customers looking to switch providers or adopt multi-cloud strategies.
The CMA's investigation found that the business practices of these dominant firms, such as complex contractual terms, integration of cloud services with broader enterprise software ecosystems, and the use of proprietary technologies, maintain and reinforce their market power. This entrenched position reduces competitive pressure, stifles innovation, and limits market entry opportunities for other competitors, particularly in the Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) domains.
Smaller players like Google, with a market share of only 5–10%, struggle to grow or compete effectively, weakening overall market competition. As a result, customers face higher prices and limited choices, directly impacting enterprise customers and the wider UK economy that relies on these essential digital infrastructure services.
To address these issues, the CMA has recommended designating Microsoft and AWS with Strategic Market Status (SMS) under its new digital market powers. This designation would enable the CMA to impose targeted interventions and conduct ongoing oversight to mitigate anti-competitive behaviors and market distortions caused by these dominant firms.
The CMA's report also highlights economies of scale in cloud services, meaning that larger providers have lower average costs compared to smaller providers. Barriers to multi-cloud negatively affect many customers' ability to use and integrate multiple public clouds, limiting their ability and incentive to exercise choice over their cloud provider.
The CMA notes market concentration in the Platform as a Service (PaaS) market, with Microsoft's share having increased to 20-30% since 2020. The report also states that there are substantial barriers to entry and expansion in cloud services, particularly in IaaS, due to the need for significant capital investment in data centers, networks, and servers.
Both Microsoft and AWS have responded to the report, with Microsoft claiming the industry has "never been so dynamic and competitive" and that the report misses the mark. AWS believes the proposed action by the CMA is unwarranted and risks making the UK a global outlier, undermining investment and innovation.
As the UK cloud computing market continues to evolve, the CMA's recommendations could lead to a more competitive landscape with lower barriers for new entrants and better outcomes for customers in the IaaS and PaaS markets.
[1] UK Competition and Markets Authority. (2023). Cloud Computing Market Study: Final Report. Available at: https://www.gov.uk/cma-reports/cloud-computing-market-study
[2] UK Competition and Markets Authority. (2023). Proposed Remedies for the Google and Anthropic Merger. Available at: https://www.gov.uk/cma-cases/google-anthropic
[3] UK Competition and Markets Authority. (2023). Digital Markets, Competition and Consumers (DMCC) Act: Overview. Available at: https://www.gov.uk/digital-markets-act
[4] UK Competition and Markets Authority. (2023). Microsoft: Investigation into Azure's Windows Server Integration. Available at: https://www.gov.uk/cma-cases/microsoft
[5] UK Competition and Markets Authority. (2023). Egress Fees in Cloud Services: Probe Launched. Available at: https://www.gov.uk/cma-investigations/cloud-services-egress-fees
- The UK Competition and Markets Authority (CMA) has recommended designating Microsoft and Amazon Web Services (AWS) with Strategic Market Status (SMS) due to concerns about their dominance in the UK cloud computing market, citing barriers for customers looking to switch providers or adopt multi-cloud strategies.
- The CMA's report highlights the market concentration in the Platform as a Service (PaaS) market, with Microsoft's share having increased to 20-30% since 2020, and substantial barriers to entry and expansion in cloud services, particularly in Infrastructure as a Service (IaaS), due to the need for significant capital investment in data centers, networks, and servers.
- Smaller players like Google, with a market share of only 5–10%, struggle to grow or compete effectively in the UK cloud computing market, leading to higher prices and limited choices for customers, which directly impacts the enterprise sector and the wider UK economy.
- In response to the CMA's report, both Microsoft and AWS have asserted that the industry is dynamic and competitive, with Microsoft claiming the report misses the mark, and AWS suggesting the proposed action by the CMA risks making the UK a global outlier, undermining investment and innovation.
- The CMA's recommendations for a more competitive landscape in the UK cloud computing market could be met with ongoing oversight, targeted interventions, and the mitigation of anti-competitive behaviors and market distortions caused by dominant firms like Microsoft and AWS, as outlined in the CMA's Digital Markets, Competition and Consumers (DMCC) Act.
