Ofcom refers UK cloud market to CMA
October 5, 2023
Following its probe into UK cloud services, Ofcom has referred the public cloud infrastructure services market to the Competition and Markets Authority for further investigation.
The media regulator said: “Our market study has identified features that make it more difficult for UK businesses to switch and use multiple cloud suppliers. We are particularly concerned about the position of the market leaders Amazon and Microsoft. We have examined the strength of competition and any features that might limit innovation and growth in this sector by making it difficult for other cloud providers to enter the market or smaller companies to expand.”
“Because the cloud sector is still evolving, we have looked at how the market is working today and how we expect it to develop in the future – aiming to identify any potential competition concerns early to prevent them becoming embedded as the market matures. We have referred the UK public cloud infrastructure services market to the Competition and Markets Authority (CMA) to carry out a market investigation. The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competition, and if so, whether it should take action or recommend others to take action,” added Ofcom.
Responding to the news, an AWS spokesperson said: “We disagree with Ofcom’s findings and believe they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer. Only a small percentage of IT spend is in the cloud, and customers can meet their IT needs from any combination of on-premises hardware and software, managed or co-location services, and cloud services. AWS designs cloud services to give customers the freedom to choose technology that best suits their needs. UK companies, and the overall economy, benefit from robust competition among IT providers, and the cloud has made switching between providers easier than ever. Any unwarranted intervention could lead to unintended harm to IT customers and competition. AWS will work constructively with the CMA.”
“AWS does not charge separate fees for switching data to another IT provider. Customers make hundreds of millions of data transfers each day in the ordinary course of business, and over 90 per cent of our customers pay nothing for data transfer because we provide them with 100 gigabytes per month for free,” they added.