Investigation Launched into Dominance of Cloud Services by Amazon, Google and Microsoft

The dominance of three US companies, Amazon, Microsoft, and Google, in Britain’s £15bn cloud computing market is currently under investigation by the regulator, Ofcom. This investigation is part of a broader study into digital communication markets. Ofcom plans to launch a market study in the upcoming weeks, focusing on competition strength in cloud services and barriers to entry in the sector. According to Ofcom, these three major providers collectively earn approximately 81% of revenues in the UK public cloud infrastructure services market.

The regulator, in collaboration with the Competition and Markets Authority, will lead the market study under the Enterprise Act 2002. Ofcom’s expertise in communications markets makes it well-positioned to conduct this study and examine the increasing importance of cloud as a fundamental element of the internet’s infrastructure.

Ofcom’s director of connectivity, Selina Chadha, emphasized the significance of digital services in transforming various aspects of our lives and expressed the need to ensure that these digital markets work effectively for individuals and businesses. This program of work aims to identify any competition concerns and ensure the proper functioning of these markets.

In addition to this investigation, Ofcom plans to conduct a broader inquiry into other digital markets throughout the year. This inquiry will include services like WhatsApp, FaceTime, Zoom, as well as smart speakers and connected televisions.

In May, Professor Diane Coyle from the University of Cambridge emphasized the need for British regulators to pay attention to how companies have leveraged the internet and cloud computing to reduce costs and potentially hinder new entrants in the market. The economies of scale enjoyed by large digital services companies could impede competition and lead to increased prices.