Amazon.com Inc (NASDAQ:AMZN) and Microsoft Corporation (NASDAQ:MSFT) are facing a UK competition probe into their dominance of the internet ‘cloud’ after Ofcom said it had become aware of “concerning practices” by the duo.
The telecoms regulator said it had referred the cloud market to the UK competition watchdog the CMA after uncovering the activities during its own investigation last year.
Ofcom said it was “particularly concerned about the practices of Amazon and Microsoft because of their market position” which it said was “already causing harm” to customers.
Charging fees to move data out of a provider’s cloud, putting restrictions on interoperability and portability and offering “committed spend” discounts were all practices that cropped up during its investigation. Ofcom said.
Microsoft and Amazon Web Services (AWS) have an estimated 70% share of the UK cloud with Google a distant third at between 5-10%.
In a statement, Fergal Farragher, a director at Ofcom, said: “We’ve done a deep dive into the digital backbone of our economy, and uncovered some concerning practices, including by some of the biggest tech firms in the world.
“High barriers to switching are already harming competition in what is a fast-growing market. We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services.”
Ofcom now wants the CMA to carry out an in-depth study of the barriers in the cloud market and take measures to improve how it works in the UK.
Amazon and Microsoft have seen the value of their cloud businesses soar over the past five years, with these divisions alone accounting for a huge chunk of the rise in the share prices of the two tech giants.