Ofcom has announced that it is going to examine the position of Amazon, Microsoft and Google in cloud services, as part of a new programme of work which aims to ensure that digital communications markets are working well for people and businesses in the UK.
Ofcom says that cloud computing is a huge and fast-growing market, and 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.
In the coming weeks, Ofcom will launch a market study under the Enterprise Act 2022 into the UK’s cloud sector. The largest providers of cloud services – known as ‘hyperscalers’ – are Amazon Web Services (AWS), Microsoft and Google. Ofcom says that collectively, these three firms generate around 81% of revenues in the UK public cloud infrastructure services market.
Ofcom says that its study will formally assess how well this market is working. It will review the strength of competition in cloud services generally and the position the three hyperscalers hold in the market. It 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.
Because 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 – aiming to identify any potential competition concerns early to prevent them becoming embedded as the market matures.
It plans to consult on its interim findings and publish a final report – including any concerns or proposed recommendations – within twelve months.
If a market is not working well, Ofcom can 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 CMA;
- accept undertakings in lieu of making a market investigation reference.
Ofcom says that it has worked 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, drawing on its expertise in communications markets and reflecting that cloud is increasingly becoming an important element of the infrastructure of the internet.
WhatsApp, Zoom and smart speakers
Over the next year, Ofcom will also start a broader programme of work to examine other digital markets, including online personal communication apps and devices for accessing audio-visual content.
It is included in how services such as WhatsApp, Facetime and Zoom are affecting the role of traditional calling and messaging, and how competition and innovation in these markets may evolve over the coming years. Ofcom also wants to understand whether any limitations on their ability to interact with each other raises potential concerns.
Another future area of focus for Ofcom is the nature and intensity of competition among digital personal assistants and audiovisual “gateways”, such as connected televisions and smart speakers. It plans to explore competition dynamics in this sector and identify whether there are any potential areas that require more formal examination. It will analyse consumer behaviour, future developments, as well as the role and business models of major market participants and their bargaining power with content providers.
