Big tech groups face probe by UK regulator over cloud services

The UK has launched a probe into the cloud market to assess whether Amazon, Microsoft and Google are limiting competition and innovation, as it steps up its scrutiny of Big Tech.

AWS, Microsoft Azure and Google, referred to as “hyperscalers” because of the size of the data centers used to process and store data, generate about 81 per cent of revenues in the £15bn UK cloud market, having increased their share from 70 per. cent in 2018, according to Ofcom, the communications regulator.

“We will examine the strength of competition in cloud services generally and the position the three hyperscalers hold in the market,” it said in a statement on Thursday.

“Because the cloud sector is still evolving, we will look at how the market is working today and how we expect it to develop in the future — aiming to identify any potential competition concerns early to prevent them becoming embedded as the market matures.”

European authorities have stepped up their scrutiny of the impact of Big Tech and video streaming companies on domestic markets. Earlier this year, the UK’s Competition and Markets Authority launched an investigation into whether Google “abused” its dominant position in the ad tech market.

Cloud computing allows individuals and companies to process and store data remotely, without relying on any of their own server and computing equipment. These services have increasingly been outsourced to hyperscaler cloud providers in recent years, which have developed complex networks of data centers around the world and tend to offer more competitive pricing for services than in-house data centers.

If the investigation, which will take up to 12 months, finds any evidence of market ill health, the regulator could recommend that the government change its rules, take competition enforcement action, or call on the CMA to investigate further.

Ofcom will also seek to start a broader probe into apps and devices for accessing audiovisual content, including WhatsApp, FaceTime and Zoom, to understand how these services are affecting traditional telecoms services such as voice calls and messaging.

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