Ofcom has proposed referring UK cloud services to the competition regulator, citing concerns that key players Amazon and Microsoft could stifle competition.
The communications regulator said it has proposed referring the sector to the Competition and Markets Authority (CMA) after it identified features which make it harder for customers to switch or use multiple providers.
It added that it was “particularly concerned about the practices of Amazon and Microsoft” due to their market position.
Amazon’s cloud service, Amazon Web Services (AWS), and Microsoft‘s Azure collectively dominate up to 70 per cent of the market, according to Ofcom. Google, who is their closest competitor, holds between 5 and 10 per cent.
“We’ve done a deep dive into the digital backbone of our economy, and uncovered some concerning practices, including by some of the biggest tech firms in the world,” said Fergal Farragher, a director at Ofcom who carried out the investigation.
Ofcom, which launched an investigation into cloud services in October, added that barriers to switching suppliers are already harming competition across the whole sector, including high fees associated with transferring data.
“We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services,” Farragher added.
The CMA said it is reviewing Ofcom’s initial findings. “We stand ready to carry out a market investigation into this area, should Ofcom determine it is required following the completion of its consultation process,” it added.
Ofcom said it would publish its final decision on market investigation recommendations by October. Amazon said it would continue to work with Ofcom ahead of the publication of its final report.
“At AWS, we design our cloud services to give customers the freedom to build the solution that is right for them, with the technology of their choice. This has driven increased competition across a range of sectors in the UK economy by broadening access to innovative, highly secure, and scalable IT services,” it added.
Microsoft said: “We look forward to continuing our engagement with Ofcom on their cloud services market study. We remain committed to ensuring the UK cloud industry stays highly competitive, and to supporting the transformative potential of cloud technologies to help accelerate growth across the UK economy.”