The UK competition authority Competition and Markets Authority (CMA) has criticized Microsoft for using its market position in the software sector and warned that the competition in the UK cloud market valued at 9 billion pounds is "not functioning.
An independent panel of the CMA concluded in a preliminary decision published on Tuesday that a lack of competition "is likely to lead to higher costs, less choice, reduced innovation, and poorer service quality for businesses and organizations.
Microsoft used its strong position in the software sector to make it difficult for Amazon Web Services (AWS) and Google Cloud to attract customers who want to use Microsoft software in the cloud, according to the investigation.
The CMA is now considering whether Microsoft and Amazon fall under the new Digital Markets Regime and should be classified as companies with "strategic market status.
The timing of the CMA decision is politically explosive: The British government is under pressure to promote economic growth and attract more investment to the country. Just last week, CMA chief Marcus Bokkerink was unexpectedly dismissed and replaced by Doug Gurr, the former Amazon UK head.
The investigation into cloud services has been ongoing for over two years. Ofcom, the British telecommunications regulator, launched a market analysis in 2022 and handed the case to the CMA last year. According to the examiners, the low competition makes it difficult for customers to switch to other providers or use multiple clouds – with potential negative impacts on prices and quality.
With a market share of up to 40 percent each, Amazon and Microsoft dominate the cloud business in the UK, while Google follows in third place.
Microsoft's antitrust expert Rima Alaily defended the company: "The report should focus on the future of AI in the UK rather than clinging to products from the last century." The cloud industry is more dynamic than ever and attracts billions in investments as well as new market entrants.
AWS rejected the CMA's conclusions and warned of negative consequences for innovation and customers: "Cloud computing has lowered costs for British businesses, expanded product selection, and spurred competition.
Google was also critical. Chris Lindsay, Vice President for Cloud Customer Engineering in EMEA, stated: "Restrictive licensing practices harm UK cloud customers, threaten economic progress, and stifle innovation. It is encouraging that the CMA has recognized this harm.
The British competition authority must present its final decision by August 4 at the latest.
