U.K. Watchdog Doubles Down on AWS, Microsoft Competition Concerns Under New Tech Law — 2nd Update
Dow Jones Newswires ·
By Edith Hancock
The U.K. competition watchdog said certain features in the country's cloud-services market hurt competition and that it would investigate whether tech giants Amazon Web Services and Microsoft must comply with its new technology law.
Based on provisional findings, the watchdog said Thursday that competition isn't working well in the sector, with AWS and Microsoft each controlling a significant portion of the cloud-services market.
It said both Microsoft and AWS have been generating returns from their cloud offerings far above their cost of capital for a number of years.
The regulator started looking into the cloud software-services space in 2023. As part of that, a panel of experts provisionally told the CMA in January it should investigate whether the companies need to comply with the Digital Markets, Competition and Consumer Act. That rulebook obliges businesses the CMA sees as having outsized power in the digital economy--or so-called strategic market status--to avoid favoring their own products and services over rivals.
On Thursday, the CMA honed in on Microsoft's licensing practices, saying the company doesn't make certain products available to rivals AWS and Google through licensing agreements, and that customers with existing licenses often can't bring these to the competing groups.
"Microsoft's licensing practices are adversely impacting the competitiveness of AWS and Google in the supply of cloud services, particularly in competing for customers that purchase cloud services which use the relevant Microsoft software as an input," the report said.
"The CMA Panel's most recent publication misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment, and rapid, AI-driven changes," a Microsoft spokesperson said.
AWS also criticized the overall verdict.
"The action proposed by the Inquiry Group is unwarranted and undermines the substantial investment and innovation that have already benefited hundreds of thousands of UK businesses," a company spokesperson said.
Microsoft, Amazon and Google--all dominant players in cloud computing--have been at odds for years over competition in the sector. Google filed a formal complaint to the European Commission last year claiming that Microsoft's licensing practices unfairly impede rivals.
"The conclusive finding that restrictive licensing harms cloud customers and competition is a watershed moment for the U.K.," Chris Lindsay, vice president of customer engineering at Google Cloud, said in response to the CMA's update. Swift action from the regulator's tech enforcers is essential to ensure U.K. businesses pay a fair price, Lindsay added.
Microsoft also said in its statement that the CMA's recommendations fail to cover Google, calling the tech giant "one of the fastest-growing cloud market participants."
Write to Edith Hancock at [email protected]
Source:
Dow Jones Newswires