Microsoft and AWS caution Ofcom against referring UK cloud market over to CMA
Microsoft and Amazon Web Services (AWS) are calling on communications regulator Ofcom to maintain off on getting the Competition and Markets Authority (CMA) to probe the UK cloud infrastructure providers market for proof of anti-competitive behaviour, it has emerged.
Ofcom has revealed in full the responses it has obtained to the interim report it revealed in April 2023 that shared its preliminary spherical of findings in regards to the how the UK cloud infrastructure providers market operates.
As reported by Computer Weekly on the time, the interim report featured accusations from Ofcom that each Microsoft and AWS use anti-competitive behaviours that will financially drawback UK customers and enterprise.
These behaviours allegedly embrace charging clients egress charges to switch their knowledge out of the cloud and imposing interoperability restrictions that imply clients have to put “additional effort into reconfiguring their data and applications to work on different clouds”, Ofcom acknowledged.
The report additionally raised a pink flag over the follow of providing clients “committed spend discounts” to incentivise them to use a single supplier for “all or most” of their cloud wants, which might make it much less engaging for them to use rival suppliers as new wants emerge.
“As a result, we are concerned that a significant number of customers, especially those with more complex requirements, may face material barriers to switching and multicloud. This cloud leave some customers ‘locked-in’ to one of the leading providers,” the report added.
“We are most concerned in relation to AWS and Microsoft, given their market position and the fact they display some form of all of the above behaviours that limit competition.”
Ofcom additionally used the interim report to affirm it’s consulting on whether or not to refer the market over to the CMA for additional investigation after uncovering proof of behaviours and options of each platforms that seem to make it tough for purchasers to change between suppliers or add additional ones to their roster of cloud companions.
Among the 30 or so responses Ofcom has obtained within the wake of its interim report are two prolonged submissions from Microsoft and AWS, by which each events define their misgivings about Ofcom’s suggestion of getting the CMA to take a better take a look at the market.
The AWS response runs to 14 pages and claims the considerations raised by Ofcom are “based on fundamental misconceptions about the IT sector, global networking technology, the actual interoperability of IT services, and the discounts on offer,” its response acknowledged.
“Rather than inhibiting customer choice, the cloud has made switching between IT providers easier than ever before. Conversely, the potential interventions identified in the interim report would likely dampen competition and impede innovation to the detriment of IT customers.”
It added: “We therefore do not consider that the proposal put forward in the interim report to refer ‘cloud infrastructure services’ to the UK’s Competition and Markets Authority for potential regulatory intervention is merited or appropriate.”
Microsoft, in the meantime, submitted a 58-page response by which it claimed the case for referring the market to the CMA “is not made out” and might stand to go away public and personal sector cloud customers worse off within the long-run.
“Given the fast-evolving and highly dynamic nature of cloud, any intervention could very well be net negative and leave UK enterprises and public sector customers worse off – if, for example, UK customers were deprived of discounts, or of innovation through ‘interoperability requirements which favour portability considerations over innovation and differentiated value-add services,” the corporate response acknowledged.
“It would be a particularly unfortunate outcome if UK businesses and public sector customers faced less vibrant and competitive cloud solutions on a global stage than those available to their rivals in the EU, the US and China.”
Computer Weekly contacted Ofcom for clarification on when the ultimate model of its report into the state of the UK cloud infrastructure providers market, however obtained no response on the time of publication.
Other respondents to Ofcom’s interim report include fellow hyperscale cloud giant Google, who mentioned in its response that it was of the view that “competition in UK cloud services is generally working well, as evidenced by the broad set of [cloud service providers]” that provide cloud infrastructure, platform and software program providers at present.
Its response additionally sought to play down the importance of egress charges, however did again Ofcom’s take that “technical interoperability barriers erected by certain legacy providers” do make it tough for purchasers to change between suppliers and make use of multicloud setups.
“We share the wider industry’s concern that the unfair licensing practices and commercial strategies deployed by certain legacy on-premises IT providers are causing significant harm to the cloud sector and UK customers at this critical inflection point by creating commercial lock-ins,” mentioned Google Cloud in its response.
“Google believes these unfair licensing practices, which Ofcom considers to be beyond the scope of its market study, represent the most significant barrier to interoperability and multicloud in the market. Google welcomes Ofcom’s continued engagement with this issue together with the CMA.”