The British regulator is preparing remedies for competition in the cloud market
Ofcom said it had found evidence showing Microsoft was making it less attractive for customers to run Office productivity applications on cloud infrastructure other than Microsoft Azure.
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LONDON — Britain’s competition regulator is preparing remedies aimed at solving competition problems in the multibillion-pound cloud computing industry.
The Competition and Markets Authority will present its interim ruling outlining “ethical” remedies for anti-competitive practices in the sector following a months-long investigation into the market, two sources familiar with the matter told CNBC.
The sources, who preferred not to be named because of the sensitive nature of the investigation, said the remedies for the cloud market could be announced in the next two weeks. The regulator previously set a deadline of November to December 2024 to publish its interim decision.
A spokesperson for the CMA declined to comment on the timing of its interim decision when asked by CNBC.
Cloud infrastructure services are a market dominated by US technology giants Amazon again Microsoft. Amazon is the biggest player in the market, providing cloud services through its Amazon Web Services (AWS) arm. Microsoft is the second largest provider, selling cloud products under its Microsoft Azure unit.
The CMA’s investigation traces its history back to 2022, when UK communications regulator Ofcom began a market study examining the dominance of cloud giants Amazon, Microsoft and Google. Ofcom then passes its cloud review to the CMA to address competition issues in the market.
Why is the CMA concerned?
Among the key issues that the CMA is expected to address with recommended ethical remedies, are companies charging “egress” fees to transfer data from one cloud to another, licensing fees considered unfair, volume discounts, and interoperability issues that make it difficult. change vendor.
According to one of the sources, there is a possibility that Google may be excluded from the list of competition remedies compared to the market size of AWS and Microsoft Azure.
Amazon and Microsoft declined to comment for this story when contacted by CNBC. Google did not immediately return a request for comment.
What might the remedies look like?
The CMA said earlier in June that it was looking more at considering behavioral remedies to address its concerns as opposed to “structural” remedies, such as a demerger order or demerger.
The watchdog said in a working paper in June that it was “in the early stages” of considering possible remedies.
Solutions floated at the time included setting price controls that limit the level of fees, lowering technical barriers to switching cloud providers, and banning agreements that encourage firms to spend more to get discounts.
One contentious measure the administrator said he was considering is requiring Microsoft to apply the same pricing to production software products regardless of which cloud they’re hosted on — a move that could have a major impact on Microsoft’s pricing structures.
CMA chief executive Sarah Cardell is expected to give a speech on Thursday at Chatham House, the UK’s policy centre. In an interview with the Financial Times, he defended the regulator’s record on strengthening competition amid criticism from Prime Minister Keir Starmer that the agency was holding back growth.
He is expected to outline plans for a 2025 review of whether the CMA should use ethical remedies every time it approves deals, reports the FT.
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