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Ofcom Amazon, Microsoft review recommendation overview:
- Who: The Office of Communications has recommended the Competition and Market Authority look into the cloud services market.
- Why: Ofcom said it is concerned that the industry is being dominated by Amazon and Microsoft.
- Where: Consumers across the UK use cloud services offered by Amazon and Microsoft.
The Office of Communications (Ofcom) has determined the Competition and Market Authority (CMA) should take a hard look into the market for cloud services, most notably cloud services offered by Amazon and Microsoft.
Ofcom, the telecom regulator in the UK, made the recommendation as part of its final report for a yearlong study into the telecom industry that was published earlier this month.
The agency said it was able to determine that there are a number of different factors which can inhibit a consumer’s ability to switch between telecom providers, notably egress fees, committed spend discounts, and technical barriers.
“Our view is that competition is being limited by market features that make it more difficult for customers to switch and use multiple suppliers (known as ‘multi-cloud’),” the telecom regulator states, in its report.
Microsoft and Amazon held combined market share of between 70% and 80% for cloud services last year, says report
Ofcom called out Microsoft and Amazon individually in its report, stating the two are the leading providers of cloud infrastructure services in the UK, and finding the pair held a combined market share of between 70% and 80% last year.
The agency said it is concerned that companies seeking to challenge Amazon and Microsoft in the cloud services market could ultimately have difficulty doing so if consumers are unable to easily switch and use multiple providers.
“There could be long lasting impacts if this leads the market to become more concentrated, with barriers to switching and multi-cloud allowing the market leaders to entrench their positions and avoid competing vigorously,” Ofcom states.
Ofcom is also concerned cloud customers could be harmed if independent service providers are unable to pressure Amazon and Microsoft, including both financially or by being denied access to innovative products.
The agency began its study into the cloud services industry last October with the goal of finding out how well the market was working, reports Law360.
In other news involving Microsoft, the company submitted to the CMA in August a new version of its proposed $68.7 million acquisition of Activision, after the watchdog stated that it would be blocking a prior proposal over concerns it could harm innovation and competition in the market for cloud gaming.
What are your thoughts on Ofcom’s final report on the market for cloud services? Let us know in the comments!
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