The Competition and Markets Authority (CMA) has today published an issues statement setting out the proposed initial scope of its market investigation into public cloud infrastructure services (cloud services), including potential remedies, should competition problems be found during its investigation.
The market was referred to the CMA for an investigation by Ofcom, following its market study, which identified features that make it difficult for UK businesses to switch and use multiple cloud suppliers. Ofcom was particularly concerned about the position of Amazon and Microsoft as leaders in the £7.5 billion cloud services market in the UK.
Cloud services allow remote access to computing resources on demand and over a network. They are being rapidly adopted by businesses across the UK and have become an essential part of how many vital services are delivered to consumers, including banking, retailing, streaming and communications. The CMA's investigation will examine the cloud services market and consider whether there are competition concerns and, if so, what interventions could improve the supply of these important services for UK customers.
The issues statement outlines the proposed initial scope of the CMA's investigation, drawing on the three features of the market Ofcom was most concerned about plus the impact, if any, of software licensing practices on cloud competition.
The CMA's investigation will examine:
- If technical barriers are making switching providers and multi-cloud (using cloud services from more than one provider) difficult for customers and whether these barriers are contributing to the lock-in of customers to a single provider.
- Whether egress fees act as a barrier to switching and multi-cloud, contribute to unpredictable costs for customers and hinder competition between cloud providers.
- If the way discounts by existing cloud providers are structured acts as a barrier to entry and expansion among cloud providers in a way that leads to longer-term harm to competition.
- The nature of the software licensing practices of the relevant cloud providers and whether these practices disincentivise customers from using rival cloud providers or raise barriers to entry in the market.
Kip Meek, chair of the CMA's inquiry group, said:
Cloud services are an essential part of how businesses in the UK operate and they underpin many aspects of our daily activities, from banking to communications. This is why effective competition in this market is so important.
Following Ofcom's market study, we're proposing to focus our investigation on a number of issues that may be affecting cloud customers' ability to switch between providers and make it harder for rival firms to enter the market. We welcome views on these issues as we get this investigation underway.
The CMA's independent inquiry group is seeking views from interested parties on the issues identified and whether there are other concerns which should also be investigated.
