UK Regulator Signals Review Of Cloud Giants

Yahoo

21 hours ago

Microsoft (NASDAQ:MSFT) and Amazon.com (NASDAQ:AMZN) are now in the spotlight from the U.K.'s Competition and Markets Authority, which says their cloud foothold is squeezing rivals and wants to fast-track Strategic Market Status reviews under the new Digital Markets, Competition and Consumers Act.
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The regulator frames it as an adverse effect on competition because the market is so concentrated and customers get locked into early choices.
In 2024 each held roughly 30% to 40% of the infrastructure-as-a-service market, while in platform-as-a-service Microsoft's share ticked up to 20% to 30% and AWS stayed at 10% to 20%.
Google (NASDAQ:GOOG) is much smaller at 5% to 10% but has been growing since 2020. The CMA called out Microsoft's licensing practices for blunting competitive pressure, saying that layering other cloud services on top of its software makes it harder for AWS and Google to compete effectively.
The worry is that technical and commercial barriers keep buyers stuck and keep new players from scaling, letting Microsoft and AWS earn returns above their cost of capital for a sustained period. That combination, the CMA says, justifies treating their cloud businesses as strategic and triggering deeper scrutiny.
if the CMA moves toward formal SMS designationexpected to be debated by its board in early 2026it could lead to behavioral constraints or remedies, muddying the outlook for the two big cloud providers and opening a window for smaller competitors.
This article first appeared on GuruFocus.