UK regulator to investigate hyperscalers' dominance of the cloud market

The UK's Competition and Markets Authority (CMA) is launching a market investigation into the supply of public cloud infrastructure services in the UK. Between them, Amazon and Microsoft enjoy a combined market share of 60-70 percent of Britain's cloud computing industry.

This follows a referral by telecoms regulator Ofcom which has expressed concerns around egress fees, discounts -- which may incentivize customers to use only one cloud provider, and technical barriers to switching.

Sarah Cardell, CEO of the CMA, says, "We welcome Ofcom's referral of public cloud infrastructure services to us for in-depth scrutiny. 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."

The CMA has appointed independent panel members to an inquiry group, who will act as the decision makers on this investigation. The group will publish an issues statement setting out the proposed focus of the CMA's investigation shortly for consultation. The investigation is set to conclude in April 2025.

Responding to the news Paul Mackay, EMEA regional VP for cloud at Cloudera says:

Ofcom and CMA's investigation into the UK cloud market will be welcomed by many organizations. I think back to how difficult switching banks or energy, internet and mobile providers used to be. It was more trouble than it was worth, fraught with delays and endless red tape. As a result, regulators stepped in, industries modernized, and it became much easier to move between service providers, giving consumers more flexibility and choice.

Cloud providers don't currently offer the same flexibility to customers. Organizations face huge exit fees and the integrations, security, tools, and skills needed to manage data is different for each cloud provider. Because of these costs and complexities, many organizations are locked into cloud services.

Mark Boost, CEO of Civo also welcomes the investigation, "This is only the beginning of an 18 month journey before we know the decision made by the CMA. In the meantime, this investigation can also be a spur for immediate action from industry. Emerging cloud providers are rapidly stepping up to offer an alternative way forward to the hyperscalers. This vision is founded on putting the needs of the user back at the heart of cloud computing: transparent, predictable pricing; a streamlined experience; and super-fast, reliable services across the board."

You can find out more about the timetable for the investigation on the CMA's case page.

Image credit: sinenkiy/depositphoto.com