The search 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.
Chesnot Getty Images
British media regulator Ofcom is investigating Amazon, Microsoft and Google’s strong hold on the cloud computing industry.
In the coming weeks, the watchdog will launch a study to examine the position of public cloud infrastructure providers and whether they create any barriers to competition.
Its 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 them on their own private infrastructure.
Regulators can take further action if companies are found to be harming competition. Selina Chadha, Ofcom’s director of connectivity, said the regulator had not yet reached a view on whether the cloud giants engaged in anti-competitive behaviour. Ofcom said it will complete its review and publish a final report with any concerns and proposed recommendations within 12 months.
Amazon, Microsoft and Google were not immediately available for comment when contacted by CNBC.
The review will be part of a wider digital strategy by Ofcom, which regulates the broadcasting and telecommunications industry in the UK.
It plans to investigate other digital markets over the next year, including personal messaging and virtual assistants like Amazon’s Alexa. Ofcom said Mater is interested in how services including WhatsApp, Apple’s FaceTime and Zoom have affected the competitive landscape between traditional calling and messaging, as well as 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 serving content continues to grow, so do the technical and economic issues facing regulators.”
“That’s why we’re launching a program of work to scrutinize these digital marketplaces, to identify any competition concerns and ensure they’re working well for the people and businesses that rely on them,” he added.
Ofcom has been chosen to enforce tough new rules to control harmful content on the internet. But the legislation, known as the Online Safety Bill, is unlikely to come into force anytime soon after Liz Truss replaces Boris Johnson as Prime Minister. With the Truss government grappling with so many problems in the UK – not least the quality of life crisis – it is expected that online security regulation will move to the back of the government’s policy priorities.
The move adds to efforts from other regulators to rein in large tech firms’ perceived stranglehold on parts of the digital economy.
Competition and market authorities have a number of active inquiries into big tech companies and want additional powers to ensure a level playing field across digital markets. The European Commission, meanwhile, has fined Google billions of dollars for alleged antitrust violations, is investigating Apple and Amazon in separate cases, and has passed landmark digital laws that could reshape the internet giants’ business models.
cloud competition
Amazon holds a comfortable lead in the cloud infrastructure services market, with its Amazon Web Services division generating billions of dollars in profits each year. In 2021, AWS achieved $62.2 billion in revenue and $18.5 billion in operating income.
Microsoft’s Azure is the first runner-up, while Google is the third largest player. Other companies, including IBM and China’s Alibaba, also operate their own cloud arms.
Combined, Amazon, Microsoft and Google generate about 81% of revenue in the UK cloud infrastructure services market, according to Ofcom, which estimates the market to be worth £15 billion ($16.8 billion).
Microsoft recently announced several changes to its cloud contract terms, effectively making it easier for customers to use Microsoft alongside competing cloud platforms. The Redmond, Washington-based company faced complaints from rivals in Europe that it was limiting choice in the market.
