Amazon and Google complain to UK’s competition regulator that Microsoft has stranglehold on the cloud

Amazon and Google complain to UK’s competition regulator that Microsoft has stranglehold on the cloud

6 Dec    Finance News, News

Amazon and Google have complained to the UK’s competition regulator that their rival, Microsoft, uses practices that restrict customer choice in the £7.5 billion cloud computing market.

In their written submissions to the Competition and Markets Authority, which is investigating the lucrative cloud computing market, the two companies accused their fellow technology giant of using its dominance in software to keep a stranglehold on the cloud.

Amazon Web Services, which claimed to have reduced prices 129 times since its launch, said that Microsoft engaged in “licensing practices that restrict customer choice and make switching more difficult”, by tying its products to its own cloud computing offering.

It said: “Microsoft changed its licensing terms in 2019 and again in 2022 to make it more difficult for customers to run some of its popular software offerings on Google Cloud, AWS and Alibaba. To use many of Microsoft’s software products with these other cloud services providers, a customer must purchase a separate licence even if they already own the software. This often makes it financially unviable for a customer to choose a provider other than Microsoft.”

Google said: “These licensing practices are the only insurmountable barrier preventing competition on the merits for new customers migrating to the cloud and for existing workloads. They lead to less choice, less innovation, and increased costs for UK customers of all sizes.”

In its turn, Microsoft accused Amazon of funding a third-party body, Cloud Infrastructure Services Providers in Europe, to engage in “a global campaign seeking to require that Microsoft makes its software available to other hyperscalers” on their own terms.

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Microsoft said: “These hyperscalers already have the resources and capabilities to compete in the cloud services market and require no further regulatory intervention from the CMA.”

The cloud is a catch-all term for computing services provided over the internet, including storage and software. Often described as the “digital backbone” of the economy because of its increasing importance to business, the sector was referred to the CMA by Ofcom in October, after a preliminary study found features that could make it harder for companies to switch or use more than one supplier.

Fergal Farragher, of Ofcom, said: “Businesses have told us they’re concerned about it being too difficult to switch or mix and match cloud providers, and it’s not clear that competition is working well. So we’re referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services.” The competition watchdog will conclude its investigation in April.

Ofcom is increasingly scrutinising digital markets and will soon receive extra powers to challenge the dominance of Big Tech.

A spokeswoman for Microsoft said: “The UK cloud industry is innovative, highly competitive and an accelerator for growth across the economy. We stand ready to contribute to the continuing market investigation.”

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