CMA: AWS and Microsoft deny cloud discounts have anti-competitive effect on market

Cloud customers are failing to see how the offering of committed spend discounts could contribute towards them becoming locked in to hyperscale cloud platforms, according to the interim findings of an anti-trust probe into the inner workings of the UK cloud industry.  

The Competition and Markets Authority (CMA) has published the first of a series of working papers designed to update stakeholders on how its investigation into the UK cloud services market is progressing.

As previously reported by Computer Weekly, the UK cloud services market was referred to the CMA for further examination by the communications regulator, Ofcom, whose own investigation into the market found evidence of alleged anti-competitive behaviour.

The CMA has previously ruled that the scope of its investigation would include a look into the impact that technical barriers and interoperability issues have on the ability of cloud buyers to switch providers or adopt a multicloud approach to sourcing services.

Also in scope of its investigation is the practice of charging customers egress fees to transfer their data to a competitor’s environment, along with the offering of discounts to lure in new customers or encourage existing ones to use more of a certain provider’s services.

The working papers include one examining the UK cloud market’s overall competitive landscape, along with others separately looking at how the charging of egress fees and the offering of committed spend discounts might impact which providers companies choose to use.

The CMA has stated that while the papers might give an indication of the areas its investigation is focusing in on, its contents do not contain any provisional details on the stance or actions it may or may not take to address any of the areas under investigation.

Against that backdrop, the competitive landscape working paper confirms that Amazon Web Services (AWS) and Microsoft are the two dominant players in the UK cloud market, with Google in third place.

“Many large customers do not see any suitable alternatives to AWS and Microsoft as their main cloud provider,” the paper stated.

“[The enterprises] do not perceive other smaller providers to have comparable offerings to AWS and Microsoft, albeit Google is perceived as being closer than Oracle and IBM and other smaller providers.”

In the wake of the CMA’s investigation being launched, AWS, Microsoft and Google have all publicly committed to abolishing egress fees

It added: “Smaller providers may still be seen as suitable alternatives for certain workloads, as they have strong offerings in relation to certain segments or types of customers.”

Where egress fees are concerned, the working paper suggests this is less of a top-of-mind concern for customers, with the working paper stating that “only a few customers that we spoke to spontaneously identified egress fees as a challenge”.

Incidentally, in the wake of the CMA’s investigation being launched, AWS, Microsoft and Google have all publicly committed to abolishing egress fees.

On the topic of offering committed spend discounts, the working paper said the anti-competitiv