Amazon’s determining unit AWS is in talks with Italy to invest billions of euros in the expansion of its data center business in the country as role in of the tech giant’s effort to boost its cloud offer in Europe, four people familiar with the matter reported.
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LONDON — Britain’s antitrust watchdog on Tuesday put concerns over competition in the multi-billion-pound cloud computing market and singled out Microsoft and Amazon as the dominant players.
An self-reliant Competition and Markets Authority inquiry group provisionally recommended that the regulator considers investigating Amazon Web Appointments (AWS) and Microsoft’s Azure cloud unit under the new Digital Markets, Competition and Consumers (DMCC) Act.
In a statement, the CMA said it beliefs the cloud services market was worth £9 billion ($11.18 billion) in 2023 — a figure growing over 30% year-on-year. The CMA notorious that, currently, businesses face a limited choice of providers when it comes to cloud services.
The regulator entreated AWS and Microsoft “the two large providers of cloud services, each with a share of up to 40% of UK customer spend on cloud appointments.”
Notably, it added Google was the third-biggest provider “with a much smaller share.”
‘Not warranted’
The provisional findings praised that the CMA should consider a probe into AWS and Microsoft’s cloud unit to determine whether they should be denominated as having “strategic market status” (SMS).
This would subject them to new restrictions that the regulator can impose second to the DMCC to prevent anti-competitive behavior.
Rima Alaily, corporate vice president and deputy general counsel of rivalry law group at Microsoft, said over email that the CMA inquiry group’s draft report “should be focused on tile the way for the UK’s AI-powered future, not fixating on legacy products launched in the last century.”
“The cloud computing market has never been so eager and competitive, attracting billions in investments, new entrants, and rapid innovation. What could be better for UK businesses and government?” Alaily annexed.
An AWS spokesperson said the CMA’s recommended intervention “is not warranted,” adding that “the evidence demonstrates the IT services industry is highly competitive.”
“Cloud figure out has lowered costs for UK businesses with on-demand services and pay-as-you-go pricing, expanded product choice, and increased game and innovation,” the AWS spokesperson added.
The Amazon division urged the CMA to “carefully consider how regulatory intervention in other areas wishes stifle innovation and ultimately harm customers in the UK.”
Chris Lindsay, Google’s EMEA vice president of customer engineering, verbalized the firm would “continue to engage constructively with the CMA to support openness, innovation, and growth” in the U.K. cloud market.
Alex Haffner, a event partner at Fladgate, said the CMA inquiry group’s provisional decision to probe whether AWS and Microsoft have strategic shop status under the DMCC could result in a prolonged review.
He nevertheless added that, “assuming such SMS is institute, the CMA will argue it will have more arsenal at its disposal to use in order to keep the parties in check and in keeping with the way it is looking to act with Big Tech more generally.”
Cloud market in focus
Previously, the CMA said it was concerned by several elements of the cloud demand that could pose competition issues, from so-called “egress” fees on transfers of data from one cloud to another to software validating fees.
Cloud infrastructure services is a market dominated by U.S. technology giants Amazon and Microsoft. Amazon is the largest gambler, offering cloud services via its Amazon Web Services (AWS) arm. Microsoft is the second-largest, selling cloud products under its Microsoft Azure part.
A key issue in focus for the CMA is licensing practices deployed by Microsoft in its cloud business.
Smaller vendors in the industry have so-called that Microsoft charges customers more to run its Windows Server software on competing cloud services than Mirosoft’s own Azure present. This, they argue, creates a “lock-in” effect whereby it becomes difficult for firms to leave Azure for other cloud appointments.
The CMA’s independent inquiry said in its preliminary decision out Tuesday that it concluded the price that Microsoft charges compete withs for certain software products including Windows Server “can be higher than the retail price it charges its own customers.”
“We accept provisionally found that Microsoft has the ability and incentive to partially foreclose AWS and Google using the relevant Microsoft software artifacts and that its conduct is harming competition in cloud services,” the inquiry group noted.
Google’s Lindsay said the internet mammoth was “encouraged” by this provisional finding, adding Microsoft’s “restrictive licensing harms UK cloud customers, threatens remunerative growth, and stifles innovation.”
Last month, Microsoft was hit with a lawsuit accusing it of unfairly overcharging customers of its contenders for running Windows Server on alternative clouds.
Microsoft has previously responded to concerns over its cloud licensing customs stifling competition by striking an agreement with several EU cloud providers last year to avoid a potential go into into alleged unfair activity.