At the start of December 2023, Reuters reported that Google had requested that the UK antitrust regulator – the ‘Competition Markets Authority’ (CMA) – should investigate and take action against Microsoft over the firm’s supposed dominance of the country’s cloud computing industry.
The U.S. tech giant’s suggestions and claims have come following initial investigations in this area back in October.
But, interestingly, this inquiry hasn’t just looked at the conduct of Microsoft. It has also looked at Amazon’s conduct, too.
However, within the last few weeks, it has been reported by numerous outlets that – despite its position in this investigation – Amazon has since joined in Google’s criticism of Microsoft over its continued conduct within the cloud market.
Here we’ve taken a closer look at how this has all unfolded over recent months and what potential knock-on effects this could have for the UK cloud industry into 2024 and beyond.
October’s Initial Regulatory Referral
The first concerns were raised in early October by Ofcom – the UK’s communications regulator – who, according to the Guardian, had referred the country’s £7.5bn cloud computing market to the CMA, after its own study had produced concerns about Microsoft and Amazon’s market positions.
More specifically, Fergal Farragher, the Ofcom director who ran the study, said companies had ‘expressed concerns about the difficulty of switching or mixing and matching cloud providers’.
What’s more, it was revealed that ‘Microsoft and Amazon together control up to 80% of the £7.5bn UK cloud computing market’ and had put in place ‘costly exit fees for transferring data to another provider’.
Interestingly, the next closest competitor to Microsoft and Amazon here is actually Google, which has a 10% share of the UK cloud computing market.
December’s Update
As the aforementioned Reuters article shows, Google has now formally submitted a letter to the CMA suggesting that ‘Microsoft’s licensing practices unfairly discouraged customers from using competitor services, even as a secondary provider alongside Azure’. A key part of the firm’s letter read:
“With Microsoft’s licensing restrictions in particular, UK customers are left with no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals”.
On top of this, Reuters also says that Google has apparently given as many as ‘six different recommendations’ to the CMA, which include: ‘forcing Microsoft to improve interoperability for customers using Azure and alongside other cloud services, and banning it from withholding security updates from those that switch’.
However – and potentially more importantly – what the Reuters piece also tells us is that the CMA did in fact officially start its investigation in October following Ofcom’s concerns. This process is still ongoing and is expected to continue into Q2 of 2025.
Amazon’s Involvement
One of the latest developments in this situation – and as mentioned earlier in this article – is that Amazon has now also criticized Microsoft, specifically for its licensing agreements.
In a letter to the CMA, the company echoed some of Google’s thoughts, stating:
“Some IT providers, such as Microsoft, use licensing practices that restrict customer choice and make switching more difficult.
For example, Microsoft changed its licensing terms in 2019 and again in 2022 to make it more difficult for customers to run some of its popular software offerings on Google Cloud, AWS, and Alibaba.
To use many of Microsoft’s software products with these other cloud services providers, a customer must purchase a separate license even if they already own the software.
This often makes it financially unviable for a customer to choose a provider other than Microsoft.”
What This Might Mean For UK Cloud Users And Providers
It’s no secret that homes and businesses across the UK use cloud computing for an array of reasons; whether it’s data storage, remote access, cloud-based payroll software, online training facilities and everything in between, these digital ways of working have never been more important.
However, as the investigation shows, finding the right cloud services can be challenging with this apparent market dominance.
So, theoretically, the CMA’s investigation could lead to new restrictions being rolled out to limit how dominant Microsoft and Amazon can be over the sector.
In other words, it will aim to make things fairer and in turn give more opportunities for smaller and newer cloud service providers to promote themselves to prospective customers.
Although the investigation won’t conclude for at least another year, a key piece of advice for users and businesses looking for new cloud services is to keep an eye out for any news updates.
It may well be that Microsoft looks to get ahead of these increasingly likely market restrictions by relaxing or changing some of the licensing practices that have caused these issues and disagreements.
