Ofcom launches probe into cloud market competition

AWS, Microsoft and Google together generate around 81% of revenue in the UK market for public cloud infrastructure services

The British media regulator Ofcom has launched an investigation into whether Amazon’s, Microsoft’s and Google’s cloud computing dominance is a threat to competition in the market.

In a statement that acknowledged the massive impact of cloud services on how telecommunications users receive and interact with services and content, the regulator said it will “examine the strength of competition in cloud services in general and the position of the three hyperscalers have on the market [and] consider any market features that may limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share.”

Known as “hyperscalers”, Amazon Web Services (AWS), Microsoft and Google are the biggest providers of cloud services and, according to Ofcom data, together generate approximately 81% of revenue in the UK market for public cloud infrastructure services.

“Because the cloud sector is still developing, we will look at how the market works today and how we expect it to develop in the future – with the aim of identifying potential competitive problems early to prevent them from becoming embedded, as the market matures,” Ofcom said.

Ofcom also set out several courses of action it will take if it finds marketing is “not working well”. These actions include making recommendations to the government to change regulations or policy; take competition or consumer enforcement action; carry out a market investigation with reference to the Competition and Markets Authority (CMA); and accepts commitments rather than making a market research reference.

The regulator will also examine additional markets, including personal messaging, because it is interested in how digital services such as Meta’s WhatsApp, Apple’s Facetime and Zoom have affected traditional calls and messages, as well as the effects of the digital personal assistants and audiovisual “gateways” market, which includes products such as Amazon’s Alexa.

“The way we live, work, play and do business has been transformed by digital services. But as the number of platforms, devices and networks serving content continues to grow, so do the technological and financial issues facing regulators,” said Selina Chadha, Ofcom’s director of connectivity. “That’s why we’re kick-starting a program of work to scrutinize these digital markets, identify any competition issues and ensure they work well for the people and businesses who rely on them.”

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