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Amazon, Microsoft and Google put under the microscope as Ofcom probes cloud services market

Regulator will examine the position of Amazon, Microsoft and Google in the cloud services market with the aim of ensuring that digital communications markets are working for UK businesses and consumers. Ofcom announced today the launch of a market study into the £15bn UK cloud services market. In particular, Ofcom will focus on the hyperscalers which between them account for approximately 81 per cent of UK public cloud service revenues.  The study will formally assess how well the market is working and the nature of competition in cloud services. Ofcom states that it will consider any market features that might limit innovation and growth in the cloud services sector by creating barriers to entry for smaller companies and preventing them from effectively competing and growing their market share.The Ofcom announcement is likely to be welcomed by smaller vendors staking niche territory in the cloud infrastructure services market, and also by businesses who have been architecting multicloud infrastructure partly to avoid the technical and commercial implications of being trapped within a single vendor ecosystem. The big three like to position themselves as "one stop shops," exploiting the very infrastructure complexity that they have, arguably, helped to create, and that their customers are trying to reduce. Ofcom states that it will invite initial views on the UK cloud services market from interested parties. Businesses fighting spiralling cloud costs might well be keen to input theirs.Enterprise cloud pricing models are generally designed to lock customers into multi-year contracts, and these are based on committing to a certain amount of usage. Swingeing cost penalties await companies exceeding agreed capacity, and the temptation to build excessive amounts of contingency in to avoid this scenario can also be expensive.The sheer complexity of pricing models and the way that billing statements are presented (often with literally thousands of line items) means that it can be very difficult to gain visibility of cloud infrastructure and costs. The need for agility means that cloud infrastructure can be commissioned in seconds, but the extent to which the hyperscalers have helped their customers get a handle on the underused or idle instances that they are paying for is debatable. That's all before you get to the data egress charges.Ofcom plan to consult on interim findings and publish a final report detailing concerns and proposed recommendations within 12 months. If competition concerns are identified Ofcom can take one or more of the following steps:Make recommendations to government to change regulations or policyTake competition or consumer enforcement actionMake a market investigation reference to the Competition and Markets Authority (CMA)Accept undertakings in lieu of making a market investigation referenceIn addition to its probing of the UK cloud services market, Ofcom has announced a broader programme of work to examine other digital markets including online personal communication apps and smart speakers and TVs.

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Author: Horwood)

Publish Date: 22/09/2022 14:09

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