US corporations Amazon, Microsoft and Google face British probe over alleged dominance in cloud computing

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The U.K. media watchdog, Ofcom, is about to undertake a review into Amazon, Microsoft, and Google’s roles in the cloud services sector.

If the regulator determines that the companies are damaging competition, it may take additional measures.

Ofcom intends to look into other digital industries, such as personal messaging apps and virtual assistants.

The British media regulator Ofcom is looking into Amazon, Microsoft, and Google’s stranglehold on the cloud computing market.

The watchdog will undertake a study in the coming weeks to investigate the situation of enterprises providing public cloud infrastructure and if they pose any impediments to competition.

Its investigation, which was announced on Thursday, will focus on “hyperscalers” such as Amazon Web Services, Microsoft Azure, and Google Cloud, which allow firms to obtain processing power and data storage from remote data centres rather than hosting it on their own private infrastructure.

If the regulator determines that the companies are damaging competition, it may take additional measures. Ofcom’s director of connectivity, Selina Chadha, stated that the regulator has not yet determined whether the cloud giants are engaging in anticompetitive activities. Within the next 12 months, Ofcom plans to complete its study and produce a final report that includes any concerns and any changes.

When CNBC contacted Amazon, Microsoft, and Google, none of them responded immediately.

The assessment will be part of Ofcom’s broader digital strategy, which oversees the broadcasting and telecoms industries in the United Kingdom.

Over the next year, it also intends to study new digital industries, such as personal messaging and virtual assistants such as Amazon’s Alexa. Ofcom stated that it is curious about how services like as Meta’s WhatsApp, Apple’s Facetime, and Zoom have impacted traditional phone and messaging, as well as the competitive landscape among digital assistants, connected TVs, and smart speakers.

Digital services have altered the way we live, work, play, and do business,” Ofcom’s Chadha said in a statement Thursday. “However, as the number of platforms, devices, and networks that offer up material grows, so do the technological and economic difficulties that regulators face.”

PC: Orange Mantra

That’s why we’re launching a work programme to examine these digital markets, uncover any competition problems, and ensure they perform well for the individuals and businesses who rely on them, she added.

Ofcom has been chosen to implement severe new rules governing hazardous content on the internet. However, the legislation, known as the Online Safety Bill, is unlikely to become law anytime soon after Liz Truss took over as Prime Minister in place of Boris Johnson. With Truss’ government dealing with a slew of issues in the United Kingdom, not least the cost-of-living crisis, it’s likely that internet safety regulation will fall to the bottom of the government’s list of policy objectives.

The action complements previous regulators’ efforts to rein in giant internet companies due to their perceived monopoly on various aspects of the digital economy.

The Competition and Markets Authority is investigating numerous Big Tech corporations and wants further powers to ensure a level playing field in digital markets. Meanwhile, the European Commission has fined Google billions of dollars for alleged antitrust violations, is investigating Apple and Amazon in separate cases, and has implemented major digital legislation that may transform the economic models of the internet titans.

Cloud competition

Amazon commands a commanding lead in the cloud infrastructure services market, with its Amazon Web Services segment profiting billions of dollars each year. AWS had $62.2 billion in revenue and over $18.5 billion in operating profitability in 2021.

Microsoft’s Azure is the first runner-up, with Google coming in third. Other companies, such as IBM and China’s Alibaba, have their own cloud divisions.

According to Ofcom, Amazon, Microsoft, and Google produce around 81% of sales in the UK’s cloud infrastructure services sector, which is estimated to be worth £15 billion ($16.8 billion).

Microsoft recently announced a variety of changes to its cloud contract conditions, allowing users to utilise alternative cloud platforms in addition to Microsoft. Competitors in Europe had complained that the Redmond, Washington-based corporation was limiting market choice.

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