The clouds are thickening over Microsoft’s Azure operations in the EU and now the UK, with the launch of a new investigation into major cloud service providers, including Amazon. The UK’s Competition and Markets Authority (CMA) is in the process of addressing its cloud gaming concerns with Microsoft’s planned acquisition of Activision Blizzard, but will soon turn its attention to Microsoft’s Azure cloud offerings and Amazon Web Services (AWS). .
This is part of a new investigation into public cloud providers in the UK after telecoms regulator Ofcom identified “a number of characteristics in the provision of cloud services that make it more difficult for customers to switch and use multiple cloud providers .”
Ofcom found issues with fees cloud customers have to pay to move their data from the cloud, discounts for using just one cloud provider and technical barriers to switching between cloud providers. Microsoft also expressly calls on the CMA to do so. “Ofcom’s report also sets out concerns it has heard about the software licensing practices of some cloud providers, particularly Microsoft,” the CMA’s press release said today.
Telecommunications regulator Ofcom has identified problems with cloud services in the UK
“The CMA’s independent investigation group will now carry out an investigation to determine whether competition is working well in this market and, if not, what action should be taken to address any issues identified,” says CMA CEO Sarah Cardell.
Although the CMA does not specifically name Amazon, Ofcom’s market research found that both Microsoft and Amazon control around 70-80 percent of the UK’s public cloud infrastructure and that the company is “particularly concerned about the practices of Amazon Web Services ( AWS)”. and Microsoft because of their market position.”
Ofcom and the CMA are not alone in their concerns about competition in the cloud market. The trade group Cloud Infrastructure Services Providers in Europe (CISPE), which includes Amazon, filed an antitrust lawsuit with the EU last year. The group argues: “Microsoft is using its dominance in productivity software to relegate European customers to its own Azure cloud infrastructure, to the detriment of European cloud infrastructure providers and users of IT services.”
Microsoft offered some licensing concessions more than a year ago, but they weren’t enough to address ongoing complaints. Earlier this year, Google even publicly called Microsoft’s licensing of cloud software a “tax,” arguing that companies have to pay a premium if they want to run software like Office on other cloud networks.
“Microsoft publicly advertises that running their software on Azure is five times cheaper or more expensive than other providers like AWS and GCP, primarily because of the tax that customers have to pay to Microsoft,” said Amit Zavery, head of platform at Google Cloud, in an interview with The Register earlier this year. “The products are priced the same in terms of infrastructure and everything else, so the license cost is higher because it uses providers other than Azure.”
The CMA’s market investigation could take 18 months, with the statutory deadline set for April 4, 2025. The UK regulator will set out theories of harm and possible remedies that could remedy the situation. The UK regulator also has the power to impose “structural remedies that may force companies to sell parts of their business to improve competition”.