Britain's media regulator has today asked the country's antitrust authority to investigate US tech giants Amazon and Microsoft's dominance of the UK cloud market.
Ofcom said it had identified features that made it more difficult for UK businesses to use multiple cloud suppliers.
Amazon Web Services (AWS) and Microsoft had a combined 70-80% share of Britain's public cloud infrastructure services market in 2022, Ofcom said.
Google was their closest competitor with 5-10%.
"The CMA (Competition and Markets Authority) will now conduct an independent investigation to decide whether there is an adverse effect on competition, and if so, whether it should take action or recommend others to take action," it said.
Microsoft said it was committed to ensuring the UK cloud industry remained innovative and highly competitive. "We will engage constructively with the CMA," a Microsoft spokesperson said.
An AWS spokesperson said the company disagreed with Ofcom's findings, adding that the company believes they are based on a fundamental misconception of how the IT sector functions, and the services and discounts on offer.
"Only a small percentage of IT spend is in the cloud, and customers can meet their IT needs from any combination of on-premises hardware and software, managed or co-location services, and cloud services," the spokesperson said.
"AWS designs cloud services to give customers the freedom to choose technology that best suits their needs. UK companies, and the overall economy, benefit from robust competition among IT providers, and the cloud has made switching between providers easier than ever," the company said.
"Any unwarranted intervention could lead to unintended harm to IT customers and competition. AWS will work constructively with the CMA," it stated.
"AWS does not charge separate fees for switching data to another IT provider."
"Customers make hundreds of millions of data transfers each day in the ordinary course of business, and over 90% of our customers pay nothing for data transfer because we provide them with 100 gigabytes per month for free," it added.
Ofcom said in April it was worried about the practices of AWS and Microsoft because of their market positions, and planned to ask the competition regulator to investigate.
Reuters reported on Tuesday that Ofcom was expected to push for an antitrust investigation.
UK businesses told Ofcom they were concerned it was too difficult to switch or mix and match cloud providers.
"So, we're referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services," said Ofcom director Fergal Farragher.
The CMA welcomed the move, saying many businesses relied on cloud services, making effective competition in the £7.5 billion market essential.
Google vice president Amit Zavery said Ofcom's referral demonstrated the need to create an open cloud market with no vendor lock-in.
"UK government agencies, businesses, and consumers want to move easily across cloud platforms and choose which services best meet their needs," he said, adding Google would continue to allow its products to run on any cloud without penalty.
The CMA will complete its investigation by April 2025.
