Britain’s competition authority previously said it was considering requiring Microsoft to charge the same price for its software, regardless of the cloud it is hosted on.
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LONDON – Britain’s competition regulator is preparing a remedy to solve competition problems in the multibillion-pound cloud computing industry.
The Competition and Markets Authority is set to unveil a provisional decision detailing “behavioral” remedies that address anti-competitive practices in the sector after a months-long investigation into the market, two sources familiar with the matter told CNBC.
The source, who preferred to remain anonymous due to the sensitive nature of the investigation, said the cloud market drug could be announced within the next two weeks. The regulator previously set a deadline of November to December 2024 to issue a provisional decision.
A CMA spokesperson declined to comment on the specific timing of the interim ruling when asked by CNBC.
Cloud infrastructure services are a market dominated by US tech giants Amazon and Microsoft. Amazon is the biggest player in the market, offering cloud services through its Amazon Web Services (AWS) arm. Microsoft is the second largest provider, selling cloud products under the Microsoft Azure unit.
The CMA’s investigation traces its history back to 2022, when UK telecoms regulator Ofcom began a market study examining the dominance of cloud giants Amazon, Microsoft and Google. Ofcom then referred the cloud review to the CMA to address competition concerns in the market.
Why is the CMA concerned?
Among the main problems that the CMA will address with the recommended behavioral remedy, are the “egress” fees that companies charge to transfer data from one cloud to another, license fees that are considered unfair, volume discounts, and interoperability issues that make it more difficult. to switch vendors.
According to one of the sources, there is a possibility that Google may be excluded from the scope of the competition remedy due to its smaller size compared to the market leaders AWS and Microsoft Azure.
Amazon and Microsoft declined to comment for this story when contacted by CNBC. Google did not immediately return a request for comment.
What might the drug look like?
The CMA had said earlier in June that it was considering more behavioral remedies to tackle the problem than “structural” remedies, such as divestment orders or operational separations.
The watchdog said in a working paper in June that it was “in the early stages” of considering potential remedies.
Existing solutions at the time included price controls that limit the level of egress fees, reduce technical barriers to switching cloud providers, and prohibit agreements that encourage companies to spend more in return for discounts.
In one controversial move, the regulator said it is considering requiring Microsoft to charge the same price for its software regardless of the cloud it’s hosted on — a move that would have a significant impact on Microsoft’s pricing structure.
CMA Executive Chair Sarah Cardell is set to deliver a speech on Thursday at Chatham House, the UK’s policy institute. In an interview with the Financial Times, he defended the regulator’s track record on competition enforcement amid criticism from Prime Minister Keir Starmer that the agency is holding back growth.
He is expected to outline plans for a review in 2025 on whether the CMA should use behavioral medicine more often when approving deals, the FT reported.
