The Competition and Markets Authority’s independent inquiry group has published provisional findings following its review of cloud services. It has provisionally found that competition is not working as well as it could be, which may be leading to higher costs, less choice, less innovation and lower quality of service for businesses and organisations across the UK economy.
In its report, the inquiry group provisionally found:
- Cloud customers face a limited choice of providers and do not consider many providers are able to provide the range of services that they need. Amazon Web Services (AWS) and Microsoft are the two large providers of cloud services, each with a share of up to 40% of UK customer spend on cloud services. Google is the next largest provider with a much smaller share.
- Technical and commercial barriers make it difficult for cloud customers to switch between and use different cloud providers, locking them into their initial choices which may not reflect their evolving business needs.
- There are significant barriers to entry and expansion due to the very large capital investment needed to supply cloud services, making it harder for alternative cloud suppliers to enter and grow in these markets.
- Microsoft is using its strong position in software to make it harder for AWS and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud. This reduces the competitive challenge that AWS and Google can provide in cloud services and to Microsoft’s position.
The inquiry group provisionally believes these concerns make it harder for customers to switch cloud provider or use multiple clouds, which may ultimately affect the price and quality of cloud services. It says that the ability of UK businesses to put healthy pressure on cloud providers to offer better deals is key to ensuring good outcomes and to unlocking the potential benefits of cloud services.
The inquiry group provisionally recommends that the CMA use its powers under the Digital Markets, Competition and Consumers Act 2024 to consider whether to designate the two largest providers, AWS and Microsoft, with strategic market status (SMS) in relation to their respective digital activities in cloud services. The CMA would be able to consider the interventions relating to egress fees, technical barriers and Microsoft’s licensing practices.
The inquiry group will consult on its provisional findings and recommendations before making a final decision by the statutory deadline of 4 August 2025.
