Amazon.com Inc (NASDAQ:AMZN), Microsoft Corp and Alphabet Inc (NASDAQ:GOOG)-owned Google face an investigation into competition in cloud services in the UK.
Communications regulator Ofcom also said it would examine other digital markets over the next year, including messaging services such as WhatsApp, FaceTime and Zoom, and connected televisions and smart speakers.
Ofcom said that if it concluded the cloud market was not working well it could recommendation policy changes, take enforcement action, or ask the UK competition regulator, the Competition and Markets Authority (CMA) to investigate.
The regulator plans to publish a final report within 12 months, it said.
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In a statement, Ofcom said cloud computing is a huge and fast-growing market, which uses remote servers to offer services such as software, storage and computing power. The user, who could be a person or business, makes use of these services but doesn’t manage them directly. The cloud has become an essential part of how products are delivered to telecoms users, as well as viewers and listeners of TV, radio and audio content.
The largest providers of cloud services – known as ‘hyperscalers’ – are Amazon Web Services (AWS), Microsoft and Google. Collectively, these three firms generate around 81% of revenues in the UK public cloud infrastructure services market.
Ofcom said its market study will examine the strength of competition in cloud services generally and the position the three 'hyperscalers' hold in the market. We will also consider any market features that might limit innovation and growth in this sector by making it difficult for other companies to enter the market and expand their share.
Because the cloud sector is still evolving, we will look at how the market is working today and how we expect it to develop in the future – aiming to identify any potential competition concerns early to prevent them becoming embedded as the market matures.
Contact the author at jon.hopkins@proactiveinvestors.com