The UK’s cloud market is fundamentally broken, the country’s Competition and Markets Authority (CMA) has found, with businesses lacking the ability to “put pressure on cloud providers to offer better deals.”
According to the results of what the CMA called a provisional investigation, Amazon Web Services (AWS) and Microsoft each control 30% to 40% of the UK’s public cloud infrastructure services market—with Google a distant third—and found “significant barriers to entry and expansion due to the very large capital investment needed for cloud infrastructure.”
In other words, regulators concluded those three cloud providers are among the only companies even able to afford to compete. The CMA also found extensive “technical and commercial barriers” prevent customers from migrating between one service to another, effectively locking them into whichever cloud provider was their initial choice. (The agency specifically called out Microsoft for restrictions on use of rival infrastructure to run Microsoft business software.)
Assuming the three companies’ domination of the UK cloud market has only caused prices to rise “on average 5% above those in a well-functioning market,” the CMA concluded, UK customers are shelling out roughly £430 million ($536 million) extra annually. The regulator noted that it estimates the public cloud infrastructure market to be growing at around 30% each year, meaning that extra cost is bound to rise dramatically as well.
The report concluded the UK government should continue investigating whether to classify AWS and Microsoft as possessing “strategic market status,” which would expose the companies to significant additional regulation and extensive fines: up to 10–20% of global turnover. In recent weeks, the CMA has also opened similar inquiries into Google over search dominance, as well as Apple and Google over their control of mobile ecosystems.
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Globally, the situation isn’t dramatically different. Synergy Research Group data from late 2024 showed AWS, Google, and Microsoft collectively accounted for over 60% of the cloud market. No other competitors rose above single-digit percentages (Alibaba Cloud was the highest at 4%). In the last quarter of 2024, Synergy data showed the three firms sucked up 68% of the $84 billion global market.
In the US, all three firms are facing antitrust investigations or suits of some kind by the Federal Trade Commission (FTC), though the lawsuit against Amazon centers around e-commerce and the suit facing Google is primarily about its search business. In late November, the FTC also reportedly began investigating Microsoft’s practices in cloud computing, software licensing, and related markets like cybersecurity and AI.
Whether or not the FTC’s tech inquiries will survive the transition under the Trump administration remains ambiguous at best.
Alex Haffner, a competition partner at the London-based Fladgate law firm, told CNBC the CMA may take a while to reach a decision on the strategic market status designation. If the agency does decide to move forward, Haffner added, “the CMA will argue it will have more arsenal at its disposal to use in order to keep the parties in check and in keeping with the way it is looking to deal with Big Tech more generally.”