The UK’s media regulator has referred the country’s £7.5bn cloud computing market to the competition watchdog for an investigation over concerns about Amazon and Microsoft.
Ofcom has asked the Competition and Markets Authority (CMA) to launch an inquiry, saying it is “particularly concerned about the position of the market leaders Amazon and Microsoft”, according to The Guardian.
Cloud computing has emerged as a significant piece of infrastructure key to the development of next-generation AI models and is widely used by businesses. However, an Ofcom study found 80% of the UK market is controlled by the two US tech giants.
Ofcom director Fergal Farragher, who led the watchdog’s study on which its recommendations to the CMA were based, said companies were concerned about the difficulty of switching or mixing and matching providers.
Ofcom also said the profits generated by Amazon and Microsoft from their operations pointed to issues around competition.
“High levels of profitability for the market leaders AWS [Amazon’s cloud business] and Microsoft indicate there are limits to the overall level of competition,” the regulator said.
The CMA confirmed it had launched an investigation, with chief executive Sarah Cardell saying: “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’s independent inquiry group will now carry out an investigation to determine whether competition in this market is working well and, if not, what action should be taken to address any issues it finds.”
The authority is set to unveil the scope of its investigation soon and will look to complete its inquiry by April 2025.
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