Tech giants under the spotlight as Ofcom kickstarts cloud probe

Amazon, Microsoft and Google under the spotlight as Ofcom kickstarts cloud probe with US tech giants

  • UK’s cloud services market is now worth £15bn after sustained growth 
  • Ofcom intends to assess how well competition is working within the market 

Britain’s communications regulator is investigating tech giants Amazon, Microsoft and Google with regard to their position within the UK’s £15billion cloud services market.

Together the three ‘hyperscalers’ generate roughly 81 per cent of revenues in the UK public cloud infrastructure services market and Ofcom said on Thursday it intended to investigate whether the market is ‘working well’ for the country’s consumers and businesses.

The regulator announced it will launch a market study into the sector ‘in the coming weeks’, assessing the strength of competition, ‘the position’ of the hyperscalers within the market, and factors ‘that might limit innovation and growth’.

Amazon Web Services, or AWS, is by far the largest player in the global cloud services market 

Cloud offerings can cover an array of different services and products

Cloud offerings can cover an array of different services and products 

While Ofcom also plans to look at other digital service providers, such as WhatsApp and Zoom, it cautioned that if competition concerns are identified in the investigation ‘it could lead to further action’.

The ‘cloud’ refers servers that can be remotely accessed over the internet – when you save or access something on the cloud, this mean it is saved on these remote servers rather than directly on your computer’s hard drive.

‘Cloud services’ simply refers to the services delivered to companies and customer over the internet, which are designed to provide easy and cheap access to applications or resources without the need for internal infrastructure.

The need for these services has grown dramatically in recent years.

According to Ofcom figures, businesses’ global IT spend has grown from 10 per cent in 2018 to 17 per cent in 2021, primarily as a result as the need for remote working. Some analysts believe this figure could hit 45 per cent by 2026.

Ofcom, which is engaging closely with the competition watchdog on the investigation, is inviting views on the market and plans to publish its findings within 12 months.

Its findings will report any concerns or proposed recommendations, which could include enforcement action or issuing policy recommendations to government.

Ofcom said: ‘Cloud computing is a huge and fast-growing market, which uses remote servers to offer services such as software, storage and computing power.

‘The user, who could be a person or business, makes use of these services but doesn’t manage them directly.

‘The cloud has become an essential part of how products are delivered to telecoms users, as well as viewers and listeners of TV, radio and audio content.

‘If we find a market is not working well, there can be negative impacts on businesses and ultimately consumers, through higher prices, lower service quality and reduced innovation.’

The 'hyperscalers' have continued to increase their market share

The ‘hyperscalers’ have continued to increase their market share