Amazon, Microsoft in crosshairs of British regulator over cloud services inquiry
CHUNYIP WONG
Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) are in the crosshairs of the UK's antitrust agency after it launched an inquiry into the cloud services market on Wednesday to study competition concerns.
After receiving a referral from Ofcom, Britain's communications regulator, the Competition and Markets Authority, or CMA, said it will "further examine the market and consider whether there are competition concerns and, if so, what interventions can improve the supply of these important services for UK customers." 
It was reported earlier this week that the two companies could face an inquiry.
In a study, Ofcom said it had "identified a number of features" in the cloud services market, estimated to be worth Â£7.5B in 2022, that would make it difficult for customers to switch and use multiple suppliers. 
"Ofcomâs report also outlines concerns it has heard about the software licensing practices of some cloud providers, in particular Microsoft," the CMA said in a statement.
An Amazon spokesperson told Seeking Alpha Amazon spokesperson that it disagreed with Ofcom's findings
"Only a small percentage of IT spend is in the cloud, and customers can meet their IT needs from any combination of on-premises hardware and software, managed or co-location services, and cloud services," the spokesperson said. "AWS designs cloud services to give customers the freedom to choose technology that best suits their needs."
The spokesperson added, however, that Amazon will "work constructively with the CMA."
Additionally, the spokesperson said AWS does not charge separate fees for switching data to other IT providers and that more than 90% of Amazon's customers "pay nothing" for data transfer due to the company's policy of giving them 100GBs per month for free.
Microsoft (MSFT) did not immediately respond to a request for comment from Seeking Alpha.
"Strong competition ensures a level playing field so that market power doesnât end up in the hands of a few players â unlocking the full potential of these rapidly evolving digital markets so that people, businesses, and the UK economy can get the maximum benefits," Sarah Cardell, CEO of the CMA, added in the release.
Combined, Amazon (AMZN) and Microsoft (MSFT) accounted for between 70% and 80% of the cloud infrastructure market in Britain in 2022 via AWS and Azure, Ofcom said. Conversely, Google (GOOG) (GOOGL), the largest competitor to the two other tech companies, had between 5% and 10%, Ofcom found.
The CMA said it will finish its investigation by April 2025.
Amazon (AMZN) and Microsoft (MSFT) shares were fractionally higher in pre-market trading on Thursday.

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