Cloud Computing Battle: AWS Accuses Microsoft of Anti-Competitive Practices in UK

AWS Accuses Microsoft of Anti-Competitive Practices in UK Cloud Computing Market

Amazon Web Services (AWS) has criticized Microsoft for engaging in anti-competitive practices in the cloud computing sector in the UK. In a letter to the UK Competition and Markets Authority (CMA), AWS claimed that Microsoft’s licensing practices restrict customer choice and make it difficult for them to switch between cloud providers.

Restrictive Licensing Conditions

According to AWS, Microsoft changed its licensing conditions in 2019 and again in 2022, making it more challenging for customers to run popular software products from Google Cloud, AWS, and Alibaba. Even if customers already own the software, they are required to purchase separate licenses to use Microsoft’s software products with other cloud service providers. AWS argues that this economic barrier often leads customers to stick with Microsoft instead of choosing alternative providers.

Concerns Raised by Regulatory Authorities

These allegations come in the wake of an investigation initiated by Ofcom, the UK’s telecommunications regulatory authority, into anti-competitive practices in the cloud infrastructure market. Ofcom’s interim report highlighted concerns that existing cloud customers in the UK may be overpaying or settling for subpar services. Some customers also expressed worries about the lack of flexibility in switching between different cloud service providers.

Antitrust Investigation and Denials

In response to Ofcom’s concerns, the CMA has launched an antitrust investigation into Microsoft and AWS’s cloud services. AWS has disputed the findings of Ofcom’s investigation, claiming that they are based on a fundamental misunderstanding of how the IT sector operates. AWS also denies imposing additional fees on customers who switch their data to other IT providers.

Google Cloud Joins the Criticism

In November, Google Cloud also sent a letter to the CMA, condemning Microsoft’s anti-competitive practices in the cloud services market. Google argued that Microsoft’s licensing restrictions leave UK customers with no economically viable alternatives to using Azure, despite their preference for other providers based on price, quality, security, innovation, and features.

Market Dominance and Investigation Timeline

According to Ofcom’s initial investigation, AWS and Microsoft Azure hold a combined market share of 60-70% in the UK cloud computing market, while Google Cloud accounts for 5-10%. The CMA investigation, expected to conclude by April 2025, aims to address concerns about anti-competitive practices and promote fair competition in the £7.5 billion UK cloud computing market.

Implications for the Cloud Computing Industry

These allegations against Microsoft by AWS and Google Cloud highlight the ongoing scrutiny of the cloud computing industry. The outcomes of the investigation could have significant implications for the future of competition in the UK cloud computing sector, shaping the market and potentially leading to changes in licensing practices.