UK cloud market set to face major investigation

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UK digital watchdog Ofcom is set to launch an investigation into the state of the cloud computing market in the nation.

The study, made under the Enterprise Act 2002, will look into the position of the largest firms such as Amazon Web Services (AWS), Microsoft, and Google amid concerns over their prominent standing.

These small number of hyperscalers thoroughly dominate the UK’s cloud market, with these three collectively generating around 81% of revenues in the UK public cloud infrastructure services field, according to a study from Synergy Research Group. 

What will the investigation look to find?

Ofcom’s study will look to formally assess how well this market is working, and will examine the strength of competition in cloud services.

The regulator will also consider any market features that might limit innovation and growth in the sector by making it difficult for other companies to enter the market and expand their share.

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

Ofcom is set to invite initial views on the UK cloud market from interested or affected parties.

What will the investigation lead to?

If Ofcom finds a market is not working well and there are negative impacts on businesses and ultimately consumers, through higher prices, lower service quality, or reduced innovation it may make recommendations to the government to change regulations or policy or take competition or consumer enforcement action.

In addition, it may make a market investigation reference to the Competition and Markets Authority (CMA) or “accept undertakings” in lieu of making a market investigation reference.

Ofcom’s final report on the matter is due to be published in 12 months. 

But it’s not just the cloud market that looks set for regulatory scrutiny.

Over the next year, Ofcom will also start a broader program of work to examine other digital markets, including online personal communication apps and devices for accessing audiovisual content.

This may include investigating how services such as WhatsApp, FaceTime, and Zoom are affecting the role of traditional calling and messaging, and how competition and innovation in these markets may evolve over the coming years

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