UK raises alarm over AWS, Microsoft cloud dominance

Ofcom has spent some of its time in recent months investigating the UK cloud services market amid growing concerns about the increasingly dominant presence of US-based hyperscalers, namely Amazon Web Services (AWS), Google Cloud and Microsoft Azure.

The UK telecom and media regulator has clearly seen enough to set the alarm bells ringing and is proposing to refer the matter to the Competition and Markets Authority (CMA) for further investigation. Ofcom particularly highlighted concerns about “the practices of Amazon and Microsoft because of their market position.”

The regulator signaled back in September that it planned to embark on a study of the market and kicked off the consultation in October.

At the time, Ofcom said that the UK’s cloud market was worth £15 billion (US$16.7 billion) and that the three hyperscalers generate around 81% of revenues in the UK public cloud infrastructure services market, according to data from Synergy Research Group (SRG). In 2021, AWS accounted for 40%, Microsoft for 25% and Google for 16% of the total revenues.

John Dinsdale, chief analyst and managing director at SRG, previously told Light Reading that the trio is “followed at a distance by IBM, Salesforce, Oracle, Rackspace, BT, SAP and iomart.”

Fast forward to April, and Ofcom said its study so far has “provisionally identified features and practices that make it more difficult for customers to switch and use multiple cloud suppliers.”

Areas of concern

Ofcom now estimates that AWS and Microsoft have a combined market share of 60–70%, with Google accounting for 5–10%. It has highlighted concerns about so-called egress fees, or the charges that customers pay to transfer their data out of a cloud, noting that the hyperscalers “set them at significantly higher rates than other providers.”

Other red marks have been set against anti-competitive practices such as technical restrictions on interoperability between services from other providers and discounts that are structured in a way to incentivise customers to use a single hyperscaler for all or most of their cloud needs.

Ofcom emphasized that referring the market for further investigation “would be a significant step” for it to take.

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