UK comms regulator Ofcom will investigate whether the dominance of Amazon, Microsoft and Google in the cloud services space is good for competition, and will also look at messaging apps and smart speakers.

Ofcom, working in tandem with its regulatory cousin the Competitions and Markets Authority, will investigate whether there are any competition concerns created by the fact the cloud services market is dominated by just three US companies; namely Amazon, Microsoft and Google. If upon completion of its probe it concludes that the answer is yes, it could lead to further action.

Ofcom values the cloud services market at £15 billion in the UK, and reckons Microsoft Azure, Google Cloud and Amazon Web services account for 81% of revenues within it.  The probe will ‘formally assess how well this market is working’ in regards to the strength of the three dominant firms and look at anything that as a consequence of that strength might stifle innovation by ‘making it difficult for other companies to enter the market and expand their share.’


When the study launches, it will invite views on the UK cloud market from ‘interested or affected parties’. A final report on its findings which will include any concerns – such as the identification of likely higher prices, lower service quality or reduced innovation –  will drop within a year, which is the usual glacial pace of these sorts of probes.

Depending on what it finds, the regulator could make recommendations to government to change regulations or policy, take competition or consumer enforcement action, or make a market investigation reference to the CMA.

“The way we live, work, play and do business has been transformed by digital services, said Selina Chadha, Ofcom’s Director of Connectivity. “But as the number of platforms, devices and networks that serve up content continues to grow, so do the technological and economic issues confronting regulators. That’s why we’re kick-starting a programme of work to scrutinise these digital markets, identify any competition concerns and make sure they’re working well for people and businesses who rely on them.”

On top of this, Ofcom says it will also start having a butchers at the state of the messaging app and smart speaker markets. In the messaging space, the regulator namechecks WhatsApp, FaceTime and Zoom in particular, and will investigate how they have changed the role of traditional calling and messaging, and again assess the competitive health of the sectors. In particular it wants to understand whether any limitations on their ability to interact with each other causes any issues.

It will also be assessing what it calls digital personal assistants and audio-visual gateways – which means things like smart speakers or TVs. So all in all a good chunk of the tech industry will come under its investigatory gaze over the next year.


Paolo Pescatore, Tech, Media and Telco Analyst at PP Foresight told us: “Each area needs to be independently assessed. Ultimately Ofcom is concerned with the dominance of a small number of players which has seen their share grow significantly. It is becoming increasingly harder for new entrants or any emerging player to compete given the established position of the big ones. In cloud there are fewer providers with the market dominated by AWS with Microsoft Azure and Google Cloud challengers competing in large part by price.”

“It is hard to see what Ofcom will do if the big tech are stifling competition. We might see restrictions, incentives to foster new players. Let’s not forget the current uncertain geo-political and macroeconomic climate with prices heading in one direction. Can the market sustain new players or significant price increases that will impact consumers?”

The spirit of the investigation is not unfounded, and the huge amount of influence a few Silicon Valley firms, collectively referred to as Big Tech, have on an increasing amount of everything is not unknown to those immersed in the tech space. And certainly its common for these firms to snap up startups that might be innovators or disruptors and absorb them into the corporate blob – in fact it can be argued that’s what the financial ecosystem of Silicon Valley is now based on.

And there clearly is a triumvirate of power within the cloud space, and the fact is that technology area is getting larger and more intertwined with all sorts of areas of society, business and industry – not least the telco market – at a very fast pace indeed, is leading to extraordinary revenues for Microsoft, Amazon and Google.

Would it be better if there were four or five major players in the sector as opposed to three? From a purely market competition perspective, it seems logical to say so. Is the outcome of Ofcom’s report likely to alter the market forces that have led these three huge US firms to become the juggernauts of the sector they are? It’s not immediately obvious how.


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