UK's Competition and Markets Authority (CMA) has initiated an antitrust investigation into Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT)'s dominance in the cloud services sector, following concerns raised by Ofcom. The probe, led by CMA CEO Sarah Cardell, was sparked on Thursday, following a year-long investigation by Ofcom that highlighted potential threats to competition in the £7.5 billion (GBP1 = USD1.2139) market.
Ofcom's investigation identified challenges faced by businesses attempting to switch suppliers in the cloud services market, which serves as a critical infrastructure for online services. The regulator voiced concerns over 'hyperscalers' Amazon and Microsoft, who held a combined market share of 70-80% in 2022. High egress fees, technical barriers to interoperability and portability, and committed spend discounts were among the issues flagged by Ofcom's Fergal Farragher.
In response to these findings, Ofcom referred the sector to the CMA. Sarah Cardell emphasized the market's pivotal role in the UK economy and underscored the necessity for interventions to prevent power concentration. The focus of the CMA probe will be to assess potential adverse effects on competition and ensure maximum benefits through robust competition.
This development comes amidst other global economic events including a bounce back of Asia-Pacific shares after a bond sell-off. In addition, UK long-term borrowing costs have reached a 25-year high while US private sector jobless claims have seen a slight increase.
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