Amazon’s computing unit AWS is in talks with Italy to invest billions of euros in the expansion of its data center business in the country as part of the tech giant’s effort to boost its cloud offer in Europe, four people familiar with the matter said.
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LONDON — Britain’s antitrust watchdog on Tuesday raised concerns over competition in the multi-billion-pound cloud computing market and singled out Microsoft and Amazon as the dominant players.
An independent Competition and Markets Authority inquiry group provisionally recommended that the regulator considers investigating Amazon Web Services (AWS) and Microsoft’s Azure cloud unit under new digital markets legislation.
In a statement, the CMA said it estimates the cloud services market was worth £9 billion ($11.18 billion) in 2023 — a figure growing over 30% year-on-year. The CMA noted that, currently, businesses face a limited choice of providers when it comes to cloud services.
The regulator called AWS and Microsoft “the two large providers of cloud services, each with a share of up to 40% of UK customer spend on cloud services.”
Notably, it added Google was the third-biggest provider “with a much smaller share.”
‘Not warranted’
Rima Alaily, corporate vice president and deputy general counsel of competition law group at Microsoft, said over email that the CMA inquiry group’s draft report “should be focused on paving the way for the UK’s AI-powered future, not fixating on legacy products launched in the last century.”
“The cloud computing market has never been so dynamic and competitive, attracting billions in investments, new entrants, and rapid innovation. What could be better for UK businesses and government?” Alaily added.
An AWS spokesperson said the CMA’s recommended intervention “is not warranted,” adding that “the evidence demonstrates the IT services industry is highly competitive.”
“Cloud computing has lowered costs for UK businesses with on-demand services and pay-as-you-go pricing, expanded product choice, and increased competition and innovation,” the AWS spokesperson added.
The Amazon division urged the CMA to “carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the UK.”
Cloud market in focus
Previously, the CMA said it was concerned by several elements of the cloud market that could pose competition issues, including so-called “egress” fees on transfers of data from one cloud to another, licensing fees, volume discounts, and interoperability issues that make it harder to switch vendor.
The CMA probe traces its history back to 2022, when U.K. telecoms regulator Ofcom kicked off a market study examining the dominance of cloud giants Amazon, Microsoft and Google. Ofcom subsequently referred its cloud review to the CMA to address competition issues in the market.
Cloud infrastructure services is a market dominated by U.S. technology giants Amazon and Microsoft. Amazon is the largest player, offering cloud services via its Amazon Web Services (AWS) arm. Microsoft is the second-largest, selling cloud products under its Microsoft Azure unit.
