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UK cloud services market faces CMA investigation

Written by Thu 5 Oct 2023

Ofcom has referred the public cloud infrastructure services market to the Competition and Markets Authority (CMA).

The independent investigation will assess competition concerns and propose potential improvements for UK customers.

This referral followed Ofcom’s recommendation in their Interim Report back in July.

The CMA welcomed the decision by Ofcom to refer public cloud infrastructure services to them for ‘in-depth scrutiny’.

“This is a £7.5 billion market that underpins a whole host of online services – from social media to AI foundation models. Many businesses now completely rely on cloud services, making effective competition in this market essential,” said Sarah Cardell, CEO of the CMA.

In a market study, Ofcom identified features in the supply of cloud services impede customer from switching provider and using multiple cloud providers.

The features which Ofcom is most concerned about are:

  • Egress fees that cloud customers must pay to move their data out of the cloud
  • Discounts that may incentivise customers to use only one cloud provider
  • Technical barriers to switching that may prevent customers from being able change or use more than one cloud provider

Ofcom said some customers have already them that they are worried about being ‘locked-in’.

The CMA have chosen independent panel members to form an inquiry group. The appointed members will be responsible for making decisions on the investigation.

In its 2023 to 2024 Annual Plan, the CMA outlined its areas of focus for the next three years. It included ensuring effective competition in digital markets, with a emphasis on its market investigation into cloud services.

The CMA said the investigation will form an important part of its wider programme work in digital markets. This includes the incoming Digital Markets, Competition and Consumer Bill.

The CMA said the group will publish an issues statement setting out the proposed focus of the CMA’s investigation for consultation. The Investigation will conclude by April 2025.


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Written by Thu 5 Oct 2023

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