This browser is not actively supported anymore. For the best passle experience, we strongly recommend you upgrade your browser.
Digital developments in focus
| 2 minutes read

CMA launches market investigation into public cloud infrastructure services

On 5 October 2023, the UK Competition and Markets Authority launched a market investigation into the supply of public cloud infrastructure services following a referral by Ofcom, the UK’s media and telecoms regulator. This follows Ofcom’s publication of the Final Report in its market study of the sector.  We discussed the launch of this study in a previous edition of our Competition and Regulatory Newsletter. 

The CMA’s investigation, which must be completed by April 2025, forms part of the authority’s wider efforts to ensure effective competition in digital markets, as set out in its 2023 to 2024 Annual Plan. The CMA will examine whether features of the public cloud market prevent, restrict or distort competition, as well as the need for structural or behavioural remedies to resolve any such concerns. 

Public cloud services providers offer organisations and individuals on-demand remote access to computing resources via the Internet. Cloud services promise faster deployment and a more scalable and cost-effective alternative to in-house computing resources, with offerings ranging from storage to analytics and software. 

Ofcom’s report notes that cloud computing is widely adopted in the UK as an important input for many consumer services, including social media, streaming and communications. It estimates that the total size of the UK market was ~£7.5 billion in 2022. According to the report, market leaders Amazon Web Services and Microsoft together accounted for 70-80% of revenues. 

Ofcom’s referral concludes that it has reasonable grounds to suspect that three features of the public cloud market impose “significant barriers to switching and multi-cloud”:

  • Egress Fees, charges that cloud customers must pay to move their data out of a cloud network;
  • Technical barriers, including interoperability and portability restrictions; and 
  • Committed spend discounts, which offer a discount to customers committing to a minimum spend over a certain period.

But Ofcom’s referral does not restrict the CMA’s investigation to these features, and the investigation may consider other practices. In particular, Ofcom also summarised numerous complaints about Microsoft’s licensing practices, though it did not conclude whether they negatively impacted competition, leaving the question open to further consideration by the CMA. 

The CMA’s investigation follows recent similar scrutiny of cloud services in Europe. In June, the French competition authority published the findings of its own study, which raised a number of other concerns, including the role of acquisitions to reinforce market positions. In September of last year, the Dutch authority raised similar issues, and proposed amendments to the EU’s Data Act (though these were not ultimately adopted.) The text of the Data Act has since obtained political agreement and is now subject to formal approval by the European Parliament and European Council. 

Elsewhere, Japan’s Fair Trade Commission published its own report into cloud services in June, while a request for public comment on the market by the US Federal Trade Commission closed in the same month. 

“We welcome Ofcom’s referral of public cloud infrastructure services to us for in-depth scrutiny. This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential. […] Strong competition ensures a level playing field so that market power doesn’t end up in the hands of a few players – unlocking the full potential of these rapidly evolving digital markets so that people, businesses, and the UK economy can get the maximum benefits.” (Sarah Cardell, Chief Executive of the CMA)


competition, tech procurement and cloud