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Amazon, Google and Microsoft face probe by UK regulator over cloud business

·Reporter
·2 min read
Ofcom will examine the strength of competition in cloud services held by Amazon, Google and Microsoft. Photo: Dado Ruvic/Reuters
Ofcom will examine the strength of competition in cloud services held by Amazon, Google and Microsoft. Photo: Dado Ruvic/Reuters

Britain's communications regulator has launched an investigation into the dominance of technology titans Amazon (AMZN), Microsoft (MSFT) and Google in cloud services.

The watchdog will assess how well the market is working, as well as any barriers to new entrants into the sector, making it harder for other firms to provide their services.

Amazon Web Service (AWS), Microsoft Azure and Google, referred to as "hyperscalers" because of the size of the data centres used to process and store data, account for around 81% of revenues in the UK cloud market, according to Ofcom.

"We will examine the strength of competition in cloud services generally and the position the three hyperscalers hold in the market," the communications regulator said in a statement on Thursday. "We will also consider any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share."

The probe, which will take up to 12 months, seeks to "ensure that digital communications markets are working well for people and businesses in the UK", it said.

It will be working closely with the Competition and Markets Authority (CMA), and said it aims to consult on its interim findings and publish a final report within a year.

If it finds competition is breached and that companies and consumers are being affected, Ofcom can take enforcement action, recommend regulation or policy changes to the government, or refer the issue to the CMA for further investigation.

Read more: Google loses Brussels antitrust case but EU court reduces fine to €4.1bn

Ofcom also plans to start a wider investigation into messaging services and devices for accessing audiovisual content, including WhatsApp, FaceTime and Zoom (ZM), to understand how these are affecting traditional telecoms services such as calls and messages.

The regulator said: "Another future area of focus for Ofcom is the nature and intensity of competition among digital personal assistants and audiovisual 'gateways' – such as connected televisions and smart speakers – through which people access traditional TV and radio, as well as online content.

"We will explore competition dynamics in this sector and identify whether there are any potential areas that require more formal examination."

The use of cloud services has boomed in recent years.

In 2018, less than 10% of all businesses’ global IT spending was for public cloud services, but this rose to 17% last year as more people worked from home due to the pandemic.

Some experts expect this to reach 45% of businesses’ IT spending by 2026, according to Ofcom.

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