December 4, 2022

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British media regulator Ofcom is investigating the tight grip of Amazon, Microsoft and Google over the cloud computing industry.

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In the coming weeks, the watchdog will launch a study to examine the status of firms offering public cloud infrastructure and whether they pose any barriers to competition.

Its investigation, announced Thursday, will focus on so-called “hyperscalers” such as Amazon Web Services, Microsoft Azure and Google Cloud, which let businesses access computing power and data storage from remote servers, rather than hosting them on their own private infrastructure.

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Further action can be taken by the regulator if it feels that the companies are hurting the competition. Ofcom’s connectivity director Celina Chadha said the regulator is yet to consider whether the cloud giant is engaging in anti-competitive behavior. Ofcom said it would conclude its review and publish a final report, including any concerns and proposed recommendations, within 12 months.

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

The review will form part of a broader digital strategy by Ofcom, which regulates the broadcast and telecommunications industries in the UK.

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It also plans to investigate other digital markets over the course of the next year, including personal messaging and virtual assistants like Amazon’s Alexa. Ofcom said it is interested in how services including Meta’s WhatsApp, Apple’s FaceTime and Zoom have impacted traditional calling and messaging as well as the competitive landscape among digital assistants, connected TVs and smart speakers.

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“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 up content continues to grow, so do the technical and economic issues facing regulators.”

“That’s why we’re starting a program of work to investigate these digital markets, identify any competition concerns, and make sure they’re working well for the people and businesses that support them,” he said. rely on.”

Ofcom has been chosen as the enforcer of tough new rules governing harmful content on the Internet. But after Liz Truss replaces Boris Johnson as prime minister, the law known as the Online Security Bill is unlikely to go into effect any time soon. Truss’s government is grappling with a plethora of problems in the UK – not least the cost crisis – it is expected that online safety regulation will move to the back of the line of policy priorities for the government.

The move adds to efforts by other regulators to rein in big tech companies, their perceived grip on various parts of the digital economy.

The Competition and Markets Authority has a number of active investigations into Big Tech companies and seeks additional authority to ensure an equal opportunity in digital markets. Meanwhile, the European Commission has fined Google billions of dollars over alleged antitrust crimes, is investigating Apple and Amazon in separate cases, and passed landmark digital laws that could reshape the internet giant’s business model. Huh.

cloud competition

Amazon maintains a comfortable lead in the cloud infrastructure services market, with its Amazon Web Services division generating billions of dollars in profits each year. In 2021, AWS generated $62.2 billion in revenue and over $18.5 billion in operating income.

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Microsoft’s Azure is the first runner-up, while Google is the third largest player. Other firms, including IBM and China’s Alibaba, also operate their own cloud arms.

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

Microsoft recently announced a number of changes to the terms of its cloud agreement to make it easier for customers to use Microsoft as well as competing cloud platforms. The Washington-based company Redmond faced complaints from rivals in Europe that it was limiting choice in the market.