The UK Competition and Markets Authority (CMA) has extended its antitrust investigation into the country’s cloud market by four months, until August 4, 2025. Previously, it was planned to complete it by April 5 next year, writes DataCenter Dynamics. In a statement published on September 19, the British regulator said that the team leading the investigation considers it impossible to complete it within the previously announced time frame.
It also stated that despite the deadline being pushed back to August, the group is committed to completing the investigation “as soon as possible.” As Computer Weekly suggests, the extension of the investigation is due to the need for a more detailed study of the licensing practices of Microsoft products and services, which could negatively affect the level of competition in the UK cloud market.
The CMA’s investigation was launched in October 2023 following the publication of a report by Ofcom, the country’s telecoms regulator, which highlighted barriers making it difficult for customers to switch between cloud providers and/or use multiple cloud providers at the same time: data migration fees, cloud repatriation fees and discounts that encourage customers to use only one supplier, etc. There have also been complaints about Microsoft’s licensing practices of charging higher fees to run its software on competitors’ clouds.
Image source: Vitaly Gariev / Unsplash
The investigation comes amid mutual accusations between cloud providers of anti-competitive behavior. In December last year, Google, according to sources, filed a complaint with the CMA about this matter against Microsoft. Amazon also found it necessary to complain to the regulator about Microsoft’s licensing practices, which make it difficult for customers to switch to other cloud providers.
The CMA announced it was extending its investigation after publishing hearing reports from Amazon Web Services (AWS), Google and Microsoft. During AWS’ hearing on July 2, the company told the CMA that it “believes that competition between IT service providers is well functioning and that cloud services meet the needs of customers both in the UK and globally in terms of pricing, innovation, product selection , diversity and quality.”
Image source: Vitaly Gariev / Unsplash
AWS said it sees on-premises IT services as competitors, noting that cloud services make up just 15% of the UK IT services market and that the idea that once customers move to the cloud they never return to on-premises services is incorrect. This was reported in the regulator’s summary published on September 16. AWS also cited examples of customers returning to on-premise solutions, highlighting the flexibility of its approach, and noted that it “welcomes the opportunity” to discuss Microsoft’s licensing practices.
«AWS stated that as of 2019, Microsoft introduced licensing restrictions that prevent customers from using previously purchased Microsoft licenses on AWS (BYOL restrictions). “AWS stated that this had a huge financial impact on customers and that customers, once they purchase Microsoft products, should retain access to them forever and be able to use them with the IT provider of their choice,” the CMA said in its summary. In the AI segment, AWS pointed to a growing number of new players that have emerged to provide additional competition to cloud providers – likely referring to CoreWeave and other cloud AI service providers.
Image source: Vitaly Gariev / Unsplash
In turn, Microsoft also rejected the existence of competition problems in the UK cloud services market, adding that “the CMA’s emerging judgments about the competitive environment and market conditions ignore real evidence that the market is very dynamic and rapidly developing, and the degree of satisfaction of customer needs is high.” . The company said there were three hyperscalers operating in the UK market and that while Google had “not achieved the same level of success as AWS and Azure to date”, it should not be excluded from the investigation.
During the hearing, Microsoft said licensing fees for its software “do not significantly increase costs for its competitors,” adding that AWS and Google have “sufficient margins to compete with Azure” and therefore the licensing fees do not limit competitors’ access to key resources. Cloud service agreements (CSAs) with commitment-based discounts are necessary for competition and their removal would lead to higher prices in the UK market, Microsoft said.
Image source: Vitaly Gariev / Unsplash
Google, during the July 19 hearing and in a statement released earlier this month, said it shared the CMA’s views on the country’s cloud market, particularly the “significant market power held by AWS and Microsoft.” For a hyperscaler with the smallest market share, this position is not surprising, noted the Data Center Dynamics resource. Google also echoed AWS’ criticism of Microsoft’s licensing practices, adding that “urgent and timely action is needed to address Microsoft’s policy concerns.” Like its rivals, Google believes that local IT solutions, rather than large clouds, play a major role in the UK market.