24.3 C
Casper
Monday, July 15, 2024

Amazon Latest to Criticize Microsoft in UK Cloud Market Probe

Must read

Amazon, like Google before it, claims Microsoft’s licensing agreements harm market competition by making it harder for customers to use rival cloud services.

Amazon has joined Google in criticizing Microsoft over licensing agreements that restrict competition in the UK’s cloud computing market, claiming Microsoft’s business practices make it harder for customers to switch to alternative cloud providers or run competing services alongside Azure. The Competition and Markets Authority (CMA) is investigating the UK’s cloud computing industry, which Amazon and Microsoft dominate.

Amazon laid out its concerns in a letter dated November 23rd, 2023, but published by the CMA yesterday:

“Some IT providers, such as Microsoft, use licensing practices that restrict customer choice and make switching more difficult. For example, Microsoft changed its licensing terms in 2019 and again in 2022 to make it more difficult for customers to run some of its popular software offerings on Google Cloud, AWS, and Alibaba. To use many of Microsoft’s software products with these other cloud service providers, customers must purchase a separate license even if they already own the software. This often makes it financially unviable for a customer to choose a provider other than Microsoft.”

The CMA recently launched a formal investigation into the UK’s cloud computing industry on October 5th after Ofcom, the country’s telecoms regulator, raised concerns about Amazon and Microsoft’s market dominance. According to the Ofcom research that prompted the referral, Amazon Web Services (AWS) and Microsoft had a combined market share of 70 to 80 percent in 2022, with Google sitting at 5 to 10 percent as their closest competitor. “This is a £7.5bn market that underpins a whole host of online services – from social media to AI foundation models,” said CMA CEO Sarah Cardell. “Many businesses now completely rely on cloud services, making effective competition in this market essential.”

Amazon’s concerns regarding Microsoft follow similar criticisms made by Google to the CMA in October. In the letter published on Tuesday, Google claims Microsoft’s licensing practices were harmful to UK customers because they leave them with “no economically reasonable alternative but to use Azure as their cloud services provider, even if they prefer the prices, quality, security, innovations, and features of rivals.” Google said these licensing practices were the biggest issue preventing competition in the UK cloud-computing market.

Microsoft updated its cloud licensing agreements in August last year to address regulatory complaints surrounding market competition and make it easier for European customers to move their existing software to rival networks. But the company’s competitors remain unconvinced, with Google Cloud Vice President Amit Zavery telling Reuters that Microsoft’s updated licensing resulted in higher costs for customers who wanted to use Google or AWS instead of Azure. Zavery said that AWS does not pose the same anticompetitive risks as Microsoft despite having a larger cloud market share because AWS customers don’t face the same licensing restrictions.

The CMA’s investigation aims to promote cloud competition so smaller providers aren’t locked out of the industry. For Google, in a distant third place, there’s an opportunity to weaken its main competition. It’s a similar situation for Amazon, the top cloud provider right now. It will be up to the CMA to investigate all the concerns fully and get to the bottom of what needs to be done to ensure fair competition in a key market.

More articles

Latest posts