Under the Enterprise Act 2002, the Office of Communications in the United Kingdom launched a study to research how the major cloud services or the ‘hyperscalers’ in the UK were working and how the attributes of their work impacted their smaller counterparts. Currently, Google has about 10% of the market shares in the UK second only to Amazon Web Services and Microsoft that have about 70% of the market share combined. The study suggests that although competitive market forces offer incentives to consumers in terms of concessions and creative products, there are other aspects of the market which are concerning.
Initial conclusions of the study:
The study suggests that steps taken by the ‘hyperscalers’ prevent users from using more cloud services and from changing their cloud service provider to assist their needs. Such steps include:
An Egress Fee:
This is a fee that a consumer of such services has to pay to relocate their data from the cloud. Most major cloud service providers set a high egress fee which discourages their clients from shifting to another service even if they get more benefits.
Limitations on use of another cloud:
These are regulations set up by service providers that hinder the functioning of particular features of their service on other services. Consumers of such services are then further required to manipulate their data and software to be able to use them on different clouds.
Although these discounts are beneficial for users of such services, they are structured in such a manner that consumers avoid shifting to other services, sometimes compromising on higher quality and better features.
Microsoft and Amazon’s response:
Spokespersons from both the service providers have promised their full support in helping the study reach a fruitful conclusion.
A spokesperson who made a remark on behalf of Microsoft claimed that they remain committed to ensure the competitive spirit of the cloud sector in the UK and support the potential of cloud services to boost the growth of the UK economy.
The spokesperson from Amazon claimed that their clients can choose the package that is best suited for their purposes. There are reports that Microsoft has offered to alter their regulations to settle the complaints related to any unfair market tactics.
What’s Up Next:
As of now, the Office of Communications is welcoming feedback on the initial conclusions drawn from their study and on their proposal to request the CMA to investigate the case. They will then release a report to conclude their observations and publicly announce their decision of approaching the CMA by October 5th.