Regulatory body in Britain advocates for tightening control over Microsoft and Amazon Web Services by granting them 'strategic market' status
The UK's Competition and Markets Authority (CMA) has proposed a significant move against Microsoft and Amazon Web Services (AWS) in the cloud market, citing concerns about their dominance and its impact on UK cloud customers. The CMA has recommended that the UK government consider designating both Microsoft and AWS as having strategic market status (SMS).
If granted, this SMS designation would trigger a formal nine-month investigation to confirm if such status is warranted. The potential actions that could follow include targeted rules and interventions aimed at encouraging competition and preventing anti-competitive practices.
Key actions could include imposing regulatory obligations on Microsoft and AWS to remove market barriers, such as restrictive licensing practices by Microsoft that make it more expensive or technically difficult to run Microsoft software on rival clouds like AWS or Google. Additionally, the firms might be required to enable easier switching for customers and remove obstacles that currently limit their ability to access competing services.
The CMA's investigation, which took 21 months, found that the UK cloud market is not working as well as it could, with Microsoft and AWS each holding roughly 30–40% of the market. This dominance has contributed to weakened competition, higher prices, and reduced innovation. The CMA highlighted that Microsoft’s licensing practices, in particular, harm AWS and Google’s ability to compete due to higher fees when using Microsoft software outside Azure.
Microsoft and Amazon have expressed their dissatisfaction with the CMA's findings, stating that the market remains competitive and that the CMA's concerns overlook ongoing innovation and investment. Google's EMEA VP of Customer Engineering, Chris Lindsay, has called for swift action from the DMU to ensure fair prices for British businesses.
If the UK cloud market was more competitive, UK businesses could potentially save around £500 million ($661 million) per year on cloud services. However, the government decision on whether to proceed with this SMS designation and any targeted interventions is expected by early 2026 after the proposed investigation and stakeholder consultation.
Meanwhile, the European Commission is also paying close attention to the situation. The US Federal Trade Commission launched an antitrust investigation into Microsoft in November 2021, requesting information on its cloud, AI, and infosec businesses. AWS believes that cloud computing has reduced costs for hundreds of thousands of UK businesses.
As the situation unfolds, it's clear that the UK cloud market is under scrutiny, with potential implications for both consumers and businesses. The CMA's proposed actions aim to ensure a level playing field among cloud providers and protect UK business customers from inflated costs or lock-in effects. The final decision will be closely watched by industry experts and stakeholders worldwide.
[1] Source: CMA Press Release, [Date] [2] Source: Microsoft Statement, [Date] [3] Source: AWS Statement, [Date] [4] Source: Google Statement, [Date]
- To encourage competition in the UK cloud market and prevent anti-competitive practices, the CMA has suggested that the UK government should consider designating both Microsoft and AWS as having strategic market status (SMS).
- If the SMS designation is granted, the investigation might lead to targeted rules and interventions, such as imposing regulatory obligations on Microsoft and AWS to remove market barriers like restrictive licensing practices and enhance easy switching for customers, ultimately promoting fair prices and competition in the cloud services market.
