As the corporate battle for supremacy in the cloud services market continues to heat up, Ofcom, the UK’s communications regulator, is reportedly considering an investigation into Amazon and Microsoft’s strategies in the country. This could have wide-reaching implications for both companies which have a strong presence in the UK market.
OFCOM’S CONSIDERATION
Ofcom, established in 2003, is the independent regulator and competition authority for the UK communications industries. The regulator recently announced that it was considering an investigation into the cloud services market, with a particular focus on the practices of Amazon’s cloud services subsidiary Amazon Web Services (AWS) and Microsoft.
The investigation would be carried out under the strict provisions of the Competition and Markets Authority (CMA), with the CMA hiring external advisors to help it assess whether or not either company had been involved in anti-competitive practices or breaches of industry regulations.
A spokesperson for Ofcom indicated that they were “concerned” about Amazon Web Services and Microsoft’s conduct in the sector and reiterated their commitment to enforcing a fair, competitive market. The investigation follows recent reports that the CMA had been instructed by the government to investigate Amazon and Microsoft over their operations in the UK cloud services market.
WHY THE INVESTIGATION?
The CMA’s investigation comes at a time when Amazon and Microsoft are both competing fiercely for market share amongst cloud services customers in the UK. It’s thought that the CMA is investigating Amazon and Microsoft as part of a wider inquiry into the competitive landscape of the cloud services industry and whether existing players are engaging in practices such as predatory pricing or limiting access to important technology.
The investigation is likely to focus on the particular strategies used by Amazon and Microsoft in the UK market. This includes the type and number of services they offer customers, their pricing models, and how they limit competition. The CMA will investigate whether the strategies used by the two companies are practices that lead to market distortions and ultimately, less competition and poorer services for consumers.
IMPLICATIONS OF THE INVESTIGATION
Ofcom’s potential investigation is being watched widely by businesses, analysts and consumers alike. Of obvious concern is how the companies involved in the probe will ultimately be affected. If Amazon and Microsoft are found to have violated UK competition laws, they could face substantial fines or even criminal proceedings.
Additionally, the outcome of the investigation could be a significant factor in determining whether Amazon and Microsoft will remain the dominant cloud services providers in the UK market moving forward. A negative outcome from the investigation could be particularly damaging for either company, as competitors such as Google, IBM and Oracle may view the UK market as an area of opportunity.
Ultimately, the CMA’s investigation will play an important role in establishing the competitiveness of the cloud services sector in the UK. It remains to be seen how Amazon and Microsoft will react to the potential investigation and what impact it will have on their future business operations in the UK.