Dominance of Microsoft and Amazon Hinders Cloud Competition in the UK

The competition watchdog has raised significant concerns about the grip Microsoft and Amazon hold over the United Kingdom’s cloud computing market. According to a panel from the Competition and Markets Authority CMA the dominance of these American technology titans is distorting competition and impeding the growth of viable alternatives. The panel noted that both Microsoft and Amazon Web Services AWS now control approximately 30 to 40 per cent each of the key segments including online storage information processing and network services while Google maintains a much smaller share of between five and ten per cent.

Barriers to switching from these providers remain high both technically and commercially. This situation frequently traps customers in long term arrangements with their initial provider often preventing a better alignment with evolving organisational needs. The panel said customers face limited choice and less ability to exercise market power which stifles innovation and productivity across the economy. The CMA highlighted that technical and contractual complexities contribute to the entrenchment of these two firms’ positions making it difficult for competitors to challenge them effectively.

Microsoft faced particular criticism for its software licensing terms which the panel alleged have negatively impacted competition particularly harming both Amazon Web Services and Google. UK spending on cloud services reached 105 billion pounds in 2024 with a yearly growth close to 30 per cent since 2020 underscoring just how essential and lucrative this market has become. These dynamics have led the CMA to consider granting both Microsoft and Amazon strategic market status in the coming year which would allow the authority more powers to intervene and foster increased competition.

Microsoft maintains that the CMA report overlooks the dynamism and heavy investment within the industry and fails to appreciate the rapid changes brought about by artificial intelligence. Amazon argues that the findings ignore clear evidence of robust competition and significant investment which have already delivered benefits to hundreds of thousands of UK businesses. Google seized upon the panel’s criticism of restrictive licensing as a pivotal moment for customers and for market competition.

With ongoing regulatory scrutiny both in the UK and Europe the cloud services sector faces a pivotal juncture. As the CMA deliberates potential new intervention powers the industry and its customers wait to see whether increased competition can be encouraged and a more balanced market restored.