The UK’s top antitrust body just named names, and it is Microsoft and Amazon. On Thursday, the Competition and Markets Authority (CMA) said both companies are abusing their hold on the cloud infrastructure market and called for a deeper investigation under the country’s new digital regulations. The announcement came after the CMA flagged serious concerns about market distortion, unfair contracts, and pricing structures that it says are locking businesses into long-term dependencies. According to the CMA, Microsoft and Amazon currently dominate the infrastructure-as-a-service (IaaS) space, with both controlling somewhere between 30% and 40% of that segment. That market includes essentials like data storage, network access, and raw computing power. Google is the third-largest player, but lags far behind with only 5% to 10% market share. The regulator said the concentration of power between the top two is limiting competition and giving both tech giants excessive control over pricing and contract terms. CMA pushes for full probe using new UK law The regulator said both companies have been earning profits far beyond the cost of their capital expenditures for an extended period, pointing to what it described as “significant unilateral market power.” Sarah Cardell, Chief Executive of the CMA, explained in a public statement that “the current structure of the UK cloud market is causing harm,” adding that “commercial practices used by the largest firms are making it harder for other players to grow and compete.” The CMA pointed directly at egress fees, costs companies pay when trying to move their data out of a provider’s cloud, as one of the main barriers keeping customers tied down. It also criticized contract terms that force users to stay locked into a single platform. The agency said these business models reduce flexibility and trap companies into using the same provider even if they want to switch. Microsoft came under additional fire for how it licenses Windows Server. The CMA said it is cheaper to run Microsoft software on Microsoft’s own cloud, Azure, than it is to run the same product on a rival platform. It said this creates an unfair pricing edge and “further restricts the already limited choice and attractiveness of alternative products and suppliers.” The regulator said these types of behavior are hurting innovation and driving up costs, especially for startups and smaller companies trying to break into the cloud market. The CMA’s report stressed that the current environment is built to favor incumbents and punish newcomers. To address the problem, the CMA is pushing for a formal probe under the Digital Markets, Competition and Consumers (DMCC) Act, a new law passed in the UK to regulate large digital platforms. The Act gives authorities the power to label companies as having “strategic market status” if they hold entrenched dominance in a particular sector. Once that label is applied, firms can face legally enforced rules that prevent them from engaging in behavior that harms competitors. The watchdog said Microsoft and Amazon both qualify for this classification and that it plans to recommend they be placed under full review. If they’re designated as strategic market players, they could be hit with targeted obligations meant to increase market access for smaller competitors and give customers more flexibility in who they do business with. Want your project in front of crypto’s top minds? Feature it in our next industry report, where data meets impact.
