Google has formally requested that the UK’s Competition and Markets Authority (CMA) investigate Microsoft’s cloud computing practices, alleging anti-competitive behavior in the market.
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This move follows similar actions by Google in other jurisdictions, reflecting ongoing concerns about Microsoft’s dominance in the cloud services sector.
The CMA has already been scrutinizing the cloud computing market, focusing on the significant market share held by major providers like Microsoft and Amazon. These two companies collectively control between 70% to 80% of the UK’s £7.5 billion cloud computing market, with Google holding approximately 5% to 10%.
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The regulator’s concerns include practices that may hinder competition, such as high egress fees, committed spend discounts, and technical barriers that make it challenging for customers to switch providers or use multiple suppliers.
Google’s complaint centers on Microsoft’s software licensing practices, which it claims restrict customer choice and increase costs for businesses wishing to use alternative cloud services. Specifically, Google alleges that Microsoft’s licensing terms make it economically unfeasible for customers to select cloud providers other than Microsoft’s Azure platform, even if they prefer the services of competitors.
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This is not the first time Microsoft’s cloud practices have come under regulatory scrutiny. In October 2023, Ofcom, the UK’s communications regulator, referred the cloud computing market to the CMA for a formal investigation, citing concerns about the dominance of Amazon and Microsoft. Ofcom highlighted issues such as costly exit fees, difficulty in combining services from different providers, and discount structures that could potentially limit competition.
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The CMA’s investigation is expected to conclude by April 2025. Depending on the findings, the CMA could designate companies like Microsoft and Amazon with “strategic market status” under new digital market regulations, imposing specific conduct requirements to enhance competition.
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These developments underscore the increasing regulatory focus on ensuring fair competition in the rapidly evolving cloud computing industry.