We have teamed up with the LIDC (International League of Competition Law) to share a series of podcasts examining some of the increasingly pressing questions around cloud computing, AI and competition law.
Over seven episodes, recorded in November 2024, Ben Evans, Shruti Hiremath and guests will look beyond the current position to identify some of the pressures the changing landscape will bring to bear.
Episode 3: Dissecting Cloud Competition
The investigations of the UK CMA and an introduction to the EU Data Act.
In episode three, the panel begin exploring the five-fold concerns raised by the UK CMA in its issues statement in relation to its cloud market investigation,. First, the authority has expressed concern that potential market concentration may be limiting choice. Although a number of large firms hold substantial market share in public cloud, the existence of on-premises and hybrid cloud solutions may temper concerns. Second, the CMA is worried that data transfer fees may prohibit switching, an issue that has been addressed in the EU under the cloud provisions of the recently enacted Data Act. Third, there is a concern that impediments to portability and interoperability may create dependencies or impair customers’ ability to move assets and to integrate across providers. Although such concerns may be valid, the panel considers the reality that market-based solutions are already developing, with industry consortia and voluntary standards bodies emerging without the need for regulatory interference. Fourth, the CMA has considered whether committed spend agreements limit customer flexibility and cause lock-in. Any intervention should be mindful of the benefits of such agreements to consumers in terms of cost savings and price stability. Finally, unfair licensing practices have come under scrutiny and there is a legitimate question as to whether some large providers may restrict competition by, for example, requiring additional fees or adherence to restrictive terms when customers use software from rival providers.[1]
While there has been substantial regulatory interest in Japan, the Netherlands, South Korea and France, all of which have completed cloud market studies, and in Spain and the USA, which have started investigations, the UK authority has advanced arguably the most detailed research and analysis of competition in the sector. The panel observes that despite this, the initial conclusions reached by the CMA and the referring authority Ofcom do not necessarily follow from the empirical market research that underpins their respective studies. Indeed, this is an issue that has been raised by Ben Evans and Sean Ennis in their co-authored consultation responses to the CMA and Ofcom. The evidence suggests that generally customers are on the ‘way in’ on their cloud journey and that, as opposed to provider restrictions, one of the key factors leading to lock-in may be that those firms do not yet have the in-house technical capability to initiate cost and time efficient switch.
[1] Since the recording of the podcast, the CMA has published its Provisional Decision Report on 28 January 2025. Further details are available at: https://www.gov.uk/cma-cases/cloud-services-market-investigation#provisional-findings.
Panel
Ben Evans (Chair) is a Postgraduate Researcher at the School of Law and Centre for Competition Policy, University of East Anglia. He is a member of the LIDC Scientific Committee.
Shruti Hiremath is Counsel in the Clifford Chance Antitrust Team in London.
Lauren Murphy is Founder and CEO of Friday Initiatives.
Sean Ennis is Director of the Centre for Competition Policy and a Professor of Competition Policy at Norwich Business School, University of East Anglia.
The series was recorded on 7 November 2024, and the views and opinions expressed therein reflect the legal context and state of affairs up to that date.
You can also watch or listen via the LIDC website, YouTube and Spotify.
