The UK's Competition and Markets Authority has provisionally concluded that the nation's cloud services market is not operating as competitively as it could, citing the dominant positions of Amazon (AMZN, Financials) and Microsoft (MSFT, Financials).

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While Google, controlled by Alphabet (GOOGL, Financials), lags with a far smaller proportion, each is expected to hold between 30% and 40% of the public cloud category. Based on the CMA's estimates, UK companies paid around 9 billion ($11.1 billion) on cloud services in 2023a sum that has increased by more than 30% yearly in past years.

The CMA claims that technological complexity and high capital investment needs make it difficult for smaller companies to start or grow on the market. Customers also find it difficult to transfer or use many providers, which the regulator claims would lock them into first service selections. Furthermore underlined as a factor restricting the capacity of rivals like Amazon and Google to draw business customers were Microsoft's software licensing policies, which demand users pay extra for operating certain Microsoft apps on competing clouds.

Under the new digital markets system, the CMA's investigation group advises the regulator to take identifying Amazon and Microsoft as having strategic market status under serious consideration. Should SMS be approved, the CMA might step in to address problems like licensing policies, egress costs, and interoperability restrictions. The regulator projects that unregulated potential above-market pricing may cost UK consumers hundreds of millions of pounds yearly, a burden that might increase along with continuous double-digit increase in cloud expenditure.

Now consulting on these preliminary results, the inquiry panel seeks comments before deciding later on 2025. Changes would, according to officials, inspire more innovation and maybe reduce prices, thereby offering companies more options and freedom in the cloud services they depend on. With UK businesses depending so much on cloud infrastructure, the CMA notes the problem as fundamental for national economic development.