Amazon, Microsoft, Google Face UK Cloud Services Probe

Tom Jowitt,
Linkedin
government parliament big ben public sector failure disaster storm clouds © CristinaMuraca Shutterstock

Ofcom confirms it will examine the role of Amazon, Microsoft and Google, which dominate the cloud services market

The UK communications regulator Ofcom has confirmed this week it will “examine the position of Amazon, Microsoft and Google in cloud services.”

The announcement said the probe will be part of a “new programme of work to ensure that digital communications markets are working well for people and businesses in the UK.”

The regulator said that over the next year, it will also start a broader programme of work to examine other digital markets, including online personal communication apps (WhatsApp, FaceTime and Zoom etc) and devices, as well as connected televisions and smart speakers.

cloud security

Market study

At the moment, the cloud services market is dominated by market leaders Amazon Web Services (AWS), Microsoft Azure, and to a lesser extend Google Cloud.

Indeed, these three “hyperscalers” together generate around 81 percent of revenues in the UK public cloud infrastructure services market, the regulator said.

Ofcom noted that the cloud has become an essential part of how products are delivered to telecoms users, as well as viewers and listeners of TV, radio and audio content.

It will thus launch a market study in the coming weeks under the Enterprise Act 2002 into the UK’s cloud sector.

“Our study will formally assess how well this market is working,” said Ofcom. “We will examine the strength of competition in cloud services generally and the position the three hyperscalers hold in the market.”

“We will also consider any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share,” it added.

The communications regulator noted that as the cloud sector is still evolving, it will look at how the market is working today and how it expects it to develop in the future, so as to identify any potential competition concerns early to prevent them becoming embedded as the market matures.

Ofcom said that when it begins its market study, it will invite initial views on the UK cloud market from interested or affected parties. It will publish a final report within twelve months.

Possible actions

Ofcom said that if it finds a market is not working well, it will take one or more of the following steps:

  • make recommendations to government to change regulations or policy;
  • take competition or consumer enforcement action;
  • make a market investigation reference to the Competition and Markets Authority (CMA);
  • accept undertakings in lieu of making a market investigation reference.

Ofcom said it has “engaged closely” with the CMA in planning the market study, and will continue to do so during the course of the project.

Ofcom will lead the market study due to its “strong expertise in communications markets and reflecting that cloud is increasingly becoming an important element of the infrastructure of the internet.”

Ofcom noted that in 2018, less than 10 percent of all businesses’ global IT spending was for public cloud services. But this rose sharply to reach 17 percent last year, as the Covid-19 pandemic increased the need for remote working.