Google, others face probe in the UK

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The U.K. Competitions and Markets Authority (CMA) has initiated an investigation into cloud services provided by Amazon (AMZN), Microsoft (MSFT), and Google’s parent company, Alphabet (GOOGL). The investigation is focused on determining whether these major cloud service providers create barriers that make it challenging for businesses to switch to or use more than one cloud service provider.

Amazon and Microsoft currently hold a significant share of the cloud infrastructure services market in the U.K., estimated at 70% to 80%. Google’s share is smaller, accounting for about 5% to 10%.

The investigation was prompted by a request from Ofcom, the U.K.’s communications regulator, which raised several concerns. These concerns include egress fees (the cost of transferring data away from a cloud provider), discounts that may discourage customers from switching providers, and technological challenges that hinder migration between cloud platforms or using multiple providers.

Amazon’s Response: Amazon dismissed the concerns, asserting that they are based on misconceptions about the IT sector. However, Amazon and Microsoft have expressed their willingness to cooperate with the CMA during the inquiry.

The CMA expects to conclude its investigation by April 2025.

This investigation in the U.K. is not an isolated case. French antitrust regulators are also examining cloud services over concerns about competition practices. In addition, the European Union’s competition authorities are investigating Microsoft’s cloud computing activities, following a complaint from the Cloud Infrastructure Services Providers in Europe (CISPE), an association that includes Amazon as a member.

In response to the news of the investigation, Amazon’s shares dropped by nearly 2%, while shares of Microsoft and Alphabet (Google’s parent company) saw a 1% decline in early trading.

Overall, this investigation reflects growing regulatory scrutiny of the major players in the cloud services industry, with a focus on ensuring fair competition and preventing anticompetitive practices that may hinder customer choice and innovation in the cloud computing sector.