Dominance of Amazon and Microsoft in cloud harming competition, UK says

The Star

5 days ago

FILE PHOTO: Figurines with computers and smartphones are seen in front of Microsoft Corporation logo in this illustration taken, February 19, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
LONDON (Reuters) -The dominant position of Amazon and Microsoft in cloud computing is harming competition, with their impact exacerbated by technical and commercial barriers to switching, an inquiry group from Britain's antitrust regulator said.
The Competition and Markets Authority (CMA) group said on Thursday the regulator should investigate whether to designate the two with strategic market status (SMS) in cloud services, which would give it new powers to intervene.
It noted, however, that the CMA has said it will not consider new SMS investigations, which are conducted by its Digital Markets Unit (DMU), until early next year.
Microsoft was singled out in its final report for licensing practices that the panel said adversely impacted Amazon Web Services (AWS) and Google.
The group said in January that Microsoft was using its dominance in enterprise software, such as Windows Server and Microsoft 365, to limit competition by charging licensing fees when its services were used on rival platforms.
Microsoft and AWS have 30-40% market shares in cloud services such as processing, storage and networking, it said.
Google is the third main provider, but it has a smaller share of 5-10%.
"Measures aimed at Microsoft and AWS would address market-wide concerns," the CMA group said.
The cloud computing industry has been scrutinised by regulators on both sides of the Atlantic.
In Europe, Microsoft clinched a 20-million-euro deal last year to settle a complaint about its licensing practices, averting an antitrust investigation and potential hefty fine.
The company said the CMA group's report "misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment, and rapid, AI-driven changes".
"Its recommendations fail to cover Google, one of the fastest-growing cloud market participants," a spokesperson said.
Amazon said "clear evidence of robust competition" had been disregarded.
"The action proposed by the Inquiry Group is unwarranted and undermines the substantial investment and innovation that have already benefited hundreds of thousands of UK businesses," a spokesperson said.
But it noted the group had recognised that action needed to be taken over Microsoft's licensing practices.
Google said the conclusive finding that restrictive licensing harmed customers and competition was a "watershed moment".
"Swift action from the DMU is essential to ensure British businesses pay a fair price and to unleash choice, innovation and economic growth in the UK," said Chris Lindsay, Google Cloud's vice president for customer engineering EMEA.
The Open Cloud Coalition and the Coalition for Fair Software Licensing said the CMA should take action quickly.
"Given the alarming anticompetitive behaviour it has identified, the current plan to start this process in early 2026 is nowhere near sufficient," said Nicky Stewart, senior advisor to the Open Cloud Coalition.
(Reporting by Paul Sandle; editing by Sarah Young and Elaine Hardcastle)