Ofcom has initiated an investigation into major cloud service providers Amazon, Microsoft, and Google, which collectively account for approximately 81% of revenues in the UK public cloud market. This inquiry aims to assess whether the market functions effectively, fostering innovation and growth without restrictions.
This examination of “hyperscalers” is part of Ofcom’s broader program to ensure that digital communications markets operate efficiently. The agency plans to extend its scrutiny to other tech firms, including WhatsApp, FaceTime, and Zoom, in subsequent investigations. When the market study begins, Ofcom will gather initial input from interested parties, with the final report anticipated to be released 12 months later, addressing any issues identified.
This initiative responds to increasing concerns over cloud concentration risk. Investment in cloud services has surged rapidly; Ofcom notes that public cloud services represented less than 10% of global IT spending among businesses in 2018, a figure that increased to 17% over the past year. Additionally, a report from Gartner forecasts that by 2026, 45% of business IT spending will be allocated to public cloud services.
Should the investigation reveal that the market is underperforming, Ofcom may propose regulatory changes, pursue competition or consumer enforcement actions, refer the matter to the Competition and Markets Authority (CMA), or accept commitments in lieu of a CMA reference. Ofcom intends to collaborate closely with the CMA throughout the study. Earlier this year, the CMA initiated its own investigation into Google concerning suspected anti-competitive behavior.
In related news, Finextra has launched its inaugural Financial Cloud Summit, scheduled for March 2, 2023. For further details and registration information, please visit the event page here.