UK’s Ofcom probes Amazon, Microsoft and Google over cloud dominance

The probe will focus on so-called “hyperscalers” like Amazon Web Services and Microsoft Azure, which allow businesses to access computing power and store data from remote servers.

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UK communications regulator Ofcom is investigating Amazon, Microsoft and By Google closely with the cloud computing industry.

In the coming weeks, the watchdog will launch a study to look at the position of companies providing public cloud infrastructure and whether they pose any barriers to competition. are not.

Their probe, announced Thursday, will focus on so-called “hyperscalers” such as Amazon Web Services, Microsoft Azure and Google Cloud, which allow businesses to access computing power and data storage from remote servers, instead of hosting it on their own infrastructure.

Regulators can take further action if it finds companies are harming competition. Selina Chadha, Ofcom’s chief connectivity officer, said the regulator had yet to reach a position on whether the cloud giants were engaging in anticompetitive behavior. Ofcom said it would conclude the review process and publish a final report including any concerns and suggested recommendations within 12 months.

Amazon, Microsoft and Google were not immediately available for comment when contacted by CNBC.

The review will be part of a broader digital strategy led by Ofcom, which regulates the UK broadcasting and telecommunications industries.

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It also plans to investigate other digital markets, including personal messaging and virtual assistants like Amazon’s Alexa, in the next year. Ofcom said it was interested in how the services included By Meta whatsapp, Apple Facetime and Launch has impacted traditional calling and messaging, as well as the competitive landscape between digital assistants, connected TVs, and smart speakers.

“The way we live, work, play and do business has been transformed by digital services,” Ofcom’s Chadha said in a statement on Thursday. “But as the number of platforms, devices and networks serving content continues to grow, so do the technological and economic issues confronting regulators.”

“That’s why we’ve started a program of work to scrutinize these digital markets, identify any competitive concerns, and make sure they work well for the people who are interested in them. and businesses rely on them,” she added.

Ofcom has been selected as the enforcer of strict new rules on controlling harmful content on the internet. But the legislation, known as the Online Safety Bill, is unlikely to come into force soon after Liz Truss replaces Boris Johnson as prime minister. With the Truss government grappling with a myriad of problems in the UK – especially the cost of living crisis – it is expected that online safety regulation will move behind the queue of priorities. government policy.

The move adds to efforts by other regulators to rein in big tech companies from overcoming the constraints they perceive to different parts of the digital economy.

The Competition and Markets Authority has some positive probes into the big Tech companies and wants more powers to ensure a level playing field in digital markets. Meanwhile, the European Commission has fined Google billions of dollars for alleged antitrust violations, is investigating Apple and Amazon in separate cases, and has passed landmark digital legislation that could reshaping the business models of internet giants.

Cloud Competition

Amazon holds the leading position in the cloud infrastructure services market, with its Amazon Web Services division making billions of dollars in profits each year. In 2021, AWS appeared in $62.2 billion in revenue and over $18.5 billion in operating income.

Microsoft’s Azure comes in first, while Google is the third biggest player. Other companies, including China’s IBM and Alibaba, also operate their own cloud computing branches.

Combined, Amazon, Microsoft and Google generate around 81% of revenue in the UK cloud infrastructure services market, which, according to Ofcom, estimates the market to be worth £15 billion ($16.8 billion). USD).

Microsoft recently announced some changes to its cloud contract terms, making it easier for customers to use competing cloud platforms as well as Microsoft. The Redmond, Washington-based company has faced complaints from rivals in Europe that it is limiting choice in the market.

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