The UK Competition and Markets Authority (CMA) has extended its antitrust investigation into the country’s cloud market by four months, pushing the deadline to August 4, 2025. Originally set to conclude by April 5 next year, the investigation’s extension reflects the complexity of the task. In a statement on September 19, the CMA noted that the team overseeing the investigation found it impossible to complete it within the previously announced timeframe. Despite the extension, they aim to complete the work “as soon as possible.” We’ll keep you updated as more details emerge.
Why Was the Extension Necessary?
According to Computer Weekly, the extension is likely due to the need for a more detailed examination of Microsoft’s licensing practices for products and services. These practices may impact competition levels in the UK cloud market. The investigation started in October 2023 after Ofcom, the country’s telecoms regulator, released a report highlighting difficulties for customers in switching between cloud providers or using multiple providers simultaneously. Issues identified included data transfer fees, cloud repatriation charges, and discounts that push customers to use a single provider. Complaints were also made about Microsoft’s licensing practices, which charge higher fees for running its software on competitors’ clouds.
The investigation has gained traction amidst ongoing accusations of anti-competitive behavior between cloud providers. In December of last year, Google reportedly filed a complaint with the CMA against Microsoft over this issue. Amazon also voiced concerns about Microsoft’s licensing practices, suggesting they create barriers for customers wishing to switch to other cloud providers.
Key Arguments from Cloud Providers
The CMA announced the investigation’s extension after publishing reports on hearings with Amazon Web Services (AWS), Google, and Microsoft. During a hearing on July 2, AWS argued that competition among IT service providers is functioning well, asserting that cloud services meet customer needs in the UK and globally. AWS also noted that cloud services only represent about 15% of the UK IT services market and contested the notion that customers never return to on-premises solutions after migrating to the cloud. They shared examples of customers returning to on-premises solutions, emphasizing their flexibility.
AWS also expressed concerns over Microsoft’s licensing restrictions, particularly the “bring your own license” (BYOL) limitations introduced in 2019, which prevent customers from using previously purchased Microsoft licenses on AWS. AWS claimed these restrictions have a significant financial impact on customers and argued that customers should retain the right to use their purchased licenses with any IT provider.
Microsoft responded to the investigation by rejecting claims of competitive issues in the UK cloud market. They argued that the CMA’s analysis ignores evidence showing that the market is “highly dynamic and fast-moving,” with high customer satisfaction. Microsoft highlighted the presence of three hyperscalers in the UK market and defended their licensing practices, stating that their fees “do not significantly increase costs for competitors.” They also emphasized that Cloud Services Agreements (CSAs) with commitment-based discounts are vital for competition and that their removal would likely lead to increased prices in the UK market.
Google echoed AWS’s criticisms of Microsoft’s licensing policies, sharing the CMA’s concerns about the “significant market power wielded by AWS and Microsoft.” As the hyperscaler with the smallest market share, Google highlighted the need for “urgent and timely action” to address Microsoft’s policies. They also argued that on-premises IT solutions are more dominant in the UK market than major cloud providers, adds NIX Solutions.
We’ll continue to monitor this investigation closely and keep you updated as new developments arise.