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The Competition and Markets Authority (CMA) has determined that Microsoft is leveraging its software dominance to impede competition in the £9bn UK cloud services market, declaring that market competition “is not working” effectively.
An independent panel commissioned by the CMA revealed on Tuesday that reduced competition in cloud services has resulted in elevated costs, diminished choices, stifled innovation, and subpar service quality for businesses and organisations.
The panel’s provisional decision specifically highlighted Microsoft’s tactics, stating, “Microsoft is using its strong position in software to make it harder for Amazon Web Services and Google to compete effectively for cloud customers that wish to use Microsoft software on the cloud.”
The findings suggest implementing the CMA’s new powers under the digital markets regime to assess whether Amazon and Microsoft should receive “strategic market status” given their market influence. This legislation, effective this month, enables the regulator to designate select companies with such status and impose specific conduct requirements to boost competition.
The timing of this decision coincides with heightened pressure on the CMA from the government to demonstrate its commitment to fostering growth, as Labour seeks to increase business investment in the UK. The recent appointment of former Amazon UK head Doug Gurr as CMA chair, replacing Marcus Bokkerink, signals a shift in regulatory approach.
Market data reveals Amazon and Microsoft each command up to 40 per cent of UK customer spend in cloud services, with Google following as the third-largest provider. The CMA must deliver its final decision by 4 August, with the investigation spanning over two years since Ofcom’s initial market study in October 2022.
Microsoft’s response through deputy general counsel Rima Alaily emphasised the market’s dynamism, while Amazon Web Services contested the need for regulatory intervention, highlighting cloud computing’s role in reducing costs for UK businesses.
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