The Competition and Markets Authority (CMA) has published (28 January) its provisional findings in an ongoing investigation into the £9 billion UK cloud services market, raising significant concerns over competition.
The inquiry group recommends the CMA board consider using newly-granted digital markets powers to investigate the activities of Amazon Web Services (AWS) and Microsoft.
The CMA’s independent inquiry group found that limited competition is leading to higher costs, reduced choice, slower innovation, and lower quality services. AWS and Microsoft dominate the UK cloud services market, collectively accounting for up to 80% of customer spending, while Google holds a significantly smaller share.
Key findings include:
- Restricted Provider Options: Many businesses face a limited choice of cloud providers capable of meeting their needs.
- Barriers to Switching: High technical and commercial costs lock customers into their initial cloud provider, making transitions difficult as needs evolve.
- Market Entry Challenges: The significant capital investment required creates obstacles for new and smaller providers to enter and compete effectively.
- Microsoft’s Practices Under Scrutiny: The company’s dominant position in software allegedly hampers AWS and Google’s ability to compete for customers seeking Microsoft’s software in cloud environments.
Kip Meek, chair of the inquiry group, stated:
“Cloud services underpin most business operations in the UK. Our provisional view is that competition in this market is not working as well as it could. Effective competition could drive choice, quality, and competitive prices—boosting innovation, productivity, and growth across the economy.”
The report highlights the potential benefits of using the Digital Markets, Competition and Consumers Act 2024 (DMCCA) to designate AWS and Microsoft with Strategic Market Status (SMS). This designation would empower the CMA to impose legally binding requirements aimed at addressing competition concerns. Proposed measures could include reducing data transfer charges, encouraging technical standardisation, and ensuring fair software licensing.
The findings follow a referral from Ofcom, which identified key issues such as egress fees and technical barriers. While these were found to harm competition, the group provisionally determined that committed spend discounts do not currently pose anti-competitive risks.
The CMA will consult on these findings before delivering its final report by the statutory deadline of 4 August 2025.
Next Steps
For more details and to contribute to the consultation, visit the CMA’s cloud services market investigation case page.
