UK telecoms regulator has launched a competition probe into the cloud market.
According to Ofcom, two US vendors Microsoft and Amazon enjoy a 60 per cent – 70 per cent share of the £15bn UK cloud services market.
Ofcom is proposing that the matter be referred to the Competition and Markets Authority (CMA) for investigation.
Writing in its blog, Ofcom said that with business and the public sector ever more reliant on cloud services, this represents an imbalance that is bad for customer choice.
“If left unchecked, competition could deteriorate further in a critical digital market for the UK economy,” the regulator said.
The regulator launched its market study in October last year. Its interim findings focus on three key areas:
High data egress charges which make it expensive to change suppliers, effectively locking users in to one platform.
Technical restrictions on interoperability, which again tie customers into the vendor’s platform, increasing the friction of moving to an alternative.
Committed spend discounts, which “can incentivise customers to use a single hyperscaler for all or most of their cloud needs, even when better quality alternatives are available.”
Together with the difficulty in negotiating with the big cloud firms, these practices push organisations into placing all their eggs in one hyperscaler basket, even when better solutions may exist elsewhere. This means the market is not functioning as it should.
“We are concerned that constraints on customers’ ability to use more than one provider could make it harder for smaller cloud providers to win business and compete with the market leaders,” Ofcom said.
