UK’s Ofcom probes Amazon, Microsoft and Google over cloud dominance
The survey will focus on so-called “hyperscalers” such as Amazon Web Services and Microsoft Azure, which allow businesses to access computing power and data storage from remote servers.
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Ofcom, the UK media regulator, is investigating Amazon, Microsoft and Google’s tight control of the cloud computing industry.
Over the next few weeks, the regulator will launch a study to examine the position of companies offering public cloud infrastructure and whether they pose any barriers to competition.
The investigation, announced Thursday, will focus on so-called “hyperscalers” such as Amazon Web Services, Microsoft Azure and Google Cloud, which allow businesses to access computing power and data storage from remote servers rather than hosting it on their own private infrastructure superior.
If the regulator finds that the companies are harming competition, it could take further action. Ofcom’s head of connectivity Selina Chadha said regulators had yet to agree on whether the cloud giant engaged in anti-competitive practices. Ofcom said it would complete its review and issue a final report within 12 months, including any concerns and recommendations.
Amazon, Microsoft and Google had no immediate comment when contacted by CNBC.
The review will be part of a wider digital strategy driven by Ofcom to regulate the UK’s broadcasting and telecommunications industries
It also plans to investigate other digital markets next year, including personal information and virtual assistants like Amazon’s Alexa. Ofcom said it was interested in how services such as Meta’s WhatsApp, Apple’s Facetime and Zoom were affecting traditional calling and messaging and the competitive landscape among digital assistants, connected TVs and smart speakers.
“The way we live, work, play and do business has been transformed by digital services,” Ofcom’s Chadha said in a statement on Thursday. “But as the number of platforms, devices and networks delivering content continues to grow, so do the technical and economic issues facing regulators.”
“That’s why we’re launching a work programme to review these digital marketplaces, identify any competition issues and make sure they work well for the people and businesses that depend on them,” she added.
Ofcom has been chosen to enforce new rules to strictly regulate harmful content on the Internet. But the legislation, known as the “Online Safety Act”, is unlikely to come into force soon after Liz Truss succeeds Boris Johnson as prime minister. With the Truss government grappling with a raft of problems in the UK – notably the cost of living crisis – online safety regulation is expected to sit at the back of the queue of government policy priorities.
The move adds to efforts by other regulators to curb the perceived shackles of big tech companies on various parts of the digital economy.
The Competition and Markets Authority has launched several active investigations into big tech companies and wants more powers to ensure a level playing field in digital markets. Meanwhile, the European Commission has fined Google billions of dollars for alleged antitrust violations, is investigating Apple and Amazon separately, and passed landmark digital laws that could reshape the internet giant’s business model.
Amazon leads the market for cloud infrastructure services, with its Amazon Web Services unit earning billions of dollars in profits each year. In 2021, AWS will have revenue of $62.2 billion and operating income of over $18.5 billion.
Microsoft’s Azure was the runner-up, while Google was the third-largest player. Others, including IBM and China’s Alibaba, also run their own cloud businesses.
According to Ofcom, Amazon, Microsoft and Google generate about 81% of the UK cloud infrastructure services market, which is estimated to be worth £15bn ($16.8bn).
Microsoft recently announced multiple changes to its cloud contract terms, effectively making it easier for customers to use competing cloud platforms as well as Microsoft. The Redmond, Washington-based company has faced complaints from European rivals that it limits market options.