The United Kingdom’s antitrust authority says that Microsoft and Amazon Web Services (AWS) are hurting competition in cloud computing, holding a combined 60 per cent to 80 per cent of the market.
After a 21-month investigation, the UK’s Competition and Markets Authority (CMA) said Microsoft and AWS each have an estimated 30 to 40 per cent of the market.
Google, the third-biggest competitor in the market, only has five to 10 per cent market share.
The rest is shared between private providers that do not have the capacity to compete with the tech giants, making Microsoft and AWS’s market share “likely to endure,” the report said.
The final report comes as experts voice concerns to Euronews Next about national security risks that could arise from using foreign tech companies for cloud services. Some governments in places like Denmark and the Netherlands are looking to swap providers.
High costs, licensing issues causing cloud concentration
Cloud providers give customers access to shared computing resources whenever needed so they don’t have to own the hardware and software for programmes they rely on everyday, the report said.
This includes processing, storage, networking, and services that can be used to manage applications in the cloud.
Competition in the cloud services market is challenging for new companies to enter, the report continued, because of high costs to get started. Additionally, very few organisations change their cloud providers due to fees and a complicated data transfer process between companies.
Microsoft was singled out in the UK government report for licensing practices that allegedly make it difficult for AWS and Google to compete. The company charges fees when those services are used on other platforms.
This affects the final price that other providers like AWS or Google would charge customers for using Microsoft products on their servers.
“These barriers can restrict customers from responding to attractive offers or accessing innovative new services from another provider, leading to weaker competition between providers,” the report found.
What comes next?
The CMA recommended that the UK government determine whether Microsoft and AWS should be designated as having strategic market status (SMS) in the cloud services market.
To do so, the government would launch a nine-month investigation that uses “evidence-based investigations, consulting and engaging with a wide range of stakeholders. It will decide by early 2026 whether to proceed.
If both companies get this designation under UK law, the government will create rules and “targeted interventions” that the tech firms will have to follow to encourage competition.
Microsoft and AWS could be fined up to 10 per cent of their global turnover if they are found in violation of these measures.
In a statement to Euronews Next, Amazon said the report “disregards clear evidence of robust competition” in the country’s IT sector.
The recommended SMS investigation is “unwarranted and undermines the substantial investment and innovation that have already benefitted hundreds of thousands of businesses,” the company added.
“It risks making the UK a global outlier at a time when businesses need regulatory predictability for the UK to maintain international competitiveness,” Amazon said.
Microsoft said in a statement that the CMA's decision "misses the mark again," by "ignoring that the cloud market has never been so dynamic and competitive" due to rapid growth in AI.
The company also said the report "failed to cover Google," which it claims is one of the fastest-growing cloud market participants in the UK.
Microsoft did not elaborate on its next steps, but said it will work with the government "toward an outcome that more accurately reflects the current competition in cloud that benefits UK customers."
Updated August 1: This story has been updated with a statement from Microsoft.
