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After referral from Ofcom, the competition regulator will likely not push the two companies to divest assets
The UK Competition and Markets Authority (CMA) has published an update on its investigation into the UK’s public cloud infrastructure services (cloud services).
Although the CMA investigation is still ongoing, it has so far concluded that “we are not currently minded to prioritise further consideration of structural or operational separation remedies.” So, while it is unlikely that the CMA will force the companies to break up their assets to promote a healthier market competition, “behavioural remedies” are likely to be introduced, “designed to remedy, mitigate or prevent any AEC [adverse effects on competition],” say the CMA. Details on these are sparse, and are in the “early stages of being considered,” says the report.
The UK public cloud infrastructure services market was referred to the CMA by Ofcom in October after a probe found “features of these cloud systems that make it more difficult for UK businesses to switch and use multiple cloud suppliers.” Companies that were individually highlighted were market leaders Amazon (AWS) and Microsoft (Azure), who have a combined market share of 70% to 80% (as of 2022). In comparison, the next closest competitor is Google, with a share of 5% to 10%.
The report concluded that there were several instances where this could limit the market competition, including high data transfer fees, spend discounts, and technical barriers to switching. This, therefore, makes it difficult for consumers to change cloud providers or use multiple providers simultaneously.
“Some UK businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud provider, and it’s not clear that competition is working well,” said Fergal Farragher, Ofcom’s Director responsible for the Market Study back in October.
“So, we’re referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services,” he continued.
The CMA will hold hearings with AWS, Google and Microsoft to discuss issues and solutions of relating to the statement released today, which will be published once complete. The results of the investigation are expected to be around October 2024.
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