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UK’s Ofcom probes Amazon, Microsoft and Google over cloud dominance

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The probe will focus on so-called “hyperscalers” like Amazon Web Services and Microsoft Azure, which allow companies to access computing power and data storage from remote servers.

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UK media regulator Ofcom is investigating Amazon, Microsoft and Google’s tight grip on the cloud computing industry.

In the coming weeks, the watchdog will launch a study to examine the position of companies offering public cloud infrastructure and determine whether they pose barriers to competition.

Its probe, announced Thursday, will focus on so-called “hyperscalers” like Amazon Web Services, Microsoft Azure and Google Cloud, which allow companies to access computing power and data storage from remote servers, rather than hosting it on their own private infrastructure.

Further action could be taken by the regulator if it finds that companies are harming competition. Selina Chadha, Ofcom’s director of connectivity, said the regulator had yet to determine whether the cloud giants were engaging in anti-competitive behavior. Ofcom said it would conclude its review and issue a final report including all concerns and proposed recommendations within 12 months.

Amazon, Microsoft and Google were not immediately available for comment when contacted by CNBC.

The review will be part of a wider digital strategy pushed by Ofcom, which regulates the broadcasting and telecommunications industries in the UK

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It also plans to investigate other digital markets, including personal messaging and virtual assistants like Amazon’s Alexa, over the next year. Ofcom has expressed interest in the impact of services such as Meta’s WhatsApp, Apple’s Facetime and Zoom on traditional calling and messaging, as well as the competitive landscape of digital assistants, connected TVs and headphones. smart speakers.

“The way we live, work, play and do business has been transformed by digital services,” Ofcom’s Chadha said in a statement on Thursday. “But as the number of platforms, devices, and networks that deliver content continues to grow, so do the technological and economic issues facing regulators.”

“That’s why we’re launching a program of work to review these digital marketplaces, identify any competition issues and make sure they work well for the people and businesses that depend on them,” she added.

Ofcom has been handpicked to enforce tough new rules on harmful content on the internet. But the legislation, known as the Online Safety Bill, is unlikely to come into force soon after Liz Truss replaces Boris Johnson as prime minister. As Truss’ government grapples with a plethora of issues in the UK – including the cost of living crisis – online safety regulation is expected to drop to the bottom of the priority list. government policies.

The move adds to efforts by other regulators to rein in big tech companies over the perceived stranglehold they have on various parts of the digital economy.

The Competition and Markets Authority has several active investigations into Big Tech companies and wants additional powers to ensure a level playing field in digital markets. The European Commission, meanwhile, has fined Google billions of dollars over alleged antitrust breaches, is investigating Apple and Amazon in separate cases, and passed landmark digital laws that could reshape the business models of the giants. the Internet.

cloud competition

Amazon holds a comfortable lead in the cloud infrastructure services market, with its Amazon Web Services division making billions of dollars in profits each year. In 2021, AWS earned $62.2 billion in revenue and over $18.5 billion in operating profit.

Microsoft’s Azure is the first runner-up, while Google is the third runner-up. Other companies, including IBM and China’s Alibaba, also operate their own cloud branches.

Together, Amazon, Microsoft and Google generate around 81% of the UK cloud infrastructure services market’s revenue according to Ofcom, which estimates the market at £15 billion ($16.8 billion).

Microsoft recently announced a number of changes to the terms of its cloud contract, making it easier for customers to use competing cloud platforms as well as Microsoft. The Redmond, Wash.-based company had faced complaints from competitors in Europe that it was limiting choice in the marketplace.