The UK Competition and Markets Authority (CMA) shocked the technology industry in October 2023 by announcing an investigation into potential anti-competitive practices in the UK cloud infrastructure services market.
The CMA is not digging a solitary ditch. Regulators around the world, from Spain and Denmark to South Africa and (if reports are to be believed) the United States, are investigating various aspects of cloud computing and its impact on competition.
This scrutiny is long overdue and represents an important step forward. For too long, regulators have turned a blind eye as the Western world’s cloud market quietly consolidated around just two cloud providers.
There is no doubt that these technology giants have played their part in the global digital industrial revolution, but their dominance, even if achieved through anti-competitive practices, is unavoidable. It is often accepted as an immutable reality.
Implicit acceptance of the status quo is a false narrative because there are other options. Challenging cloud providers are ready to compete for only a level playing field.
For investigations like the CMA to be successful, it is important that decision makers don’t let dominant cloud providers dominate the conversation and give equal weight to the voices of challengers.
Early next year, the CMA’s preliminary views on the four “theories of harm” under investigation will be revealed.
These range from concerns about exploitative pricing practices to barriers that limit customers from switching providers.
Over the summer, the CMA proposed a number of remedies to combat these. While we cannot speculate on the exact conclusion, one thing is clear: Challenger cloud providers have a strong, unified view based on decades of accumulated experience. is.
These challengers provide vital reality to what is often a dry and legalistic debate.
The industry may be guilty of using technical terms like “data transmission charges” and “anti-competitive licensing practices,” but these terms have real-world consequences.
Asking challenger providers to explain what these practices mean for their businesses will show that dominant players charge exorbitant fees to customers who try to leave their platforms, or that they are widely used. You’ll likely hear stories of competitors dramatically increasing the cost of running their software on their competitors’ software. cloud. These practices have significant competitive implications.
If the CMA can create a framework that enables competition, the benefits will trickle down to the market. Through their agility and innovation, challenger cloud providers will drive down prices, expand consumer choice, and drive further technological advancements. It also helps address critical concerns such as cloud concentration risk and digital resilience. These are becoming increasingly urgent as we rely more on cloud services.
The stakes are no more. This is not just an issue for today’s challengers and consumers. It’s about future-proofing your entire cloud ecosystem. Emerging markets such as AI and quantum computing, both of which rely heavily on cloud infrastructure, must not fall victim to a “winner-takes-all” scenario.
Such an outcome would stifle innovation and centralize power in ways that could threaten the world’s digital resilience and even national security.
The CMA, along with its international counterparts, has a unique and urgent opportunity to reset the dial. This is a moment that heralds a new era of openness, competition, and fairness in the cloud market.
Challenger cloud providers will be watching closely to see how the CMA’s interim decisions translate into meaningful solutions that benefit not only the industry, but also consumers, the wider economy and the future of digital innovation. .
The past 12 months may have launched the cloud market research launch, but the next 12 months could be when real change begins.
