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UK Probe into Amazon, Microsoft and Google's Dominance in Cloud Computing

The British media regulator Ofcom is investigating the dominance of Amazon, Microsoft and Google in the cloud computing industry. These companies have a tight grip on the market, and Ofcom is looking into whether this is harmful to consumers and competition.

September 22, 2022
8 minutes
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The British media regulator Ofcom is investigating the dominance of Amazon, Microsoft and Google in the cloud computing industry. These companies have a tight grip on the market, and Ofcom is looking into whether this is harmful to consumers and competition.

The watchdog will soon launch a study to examine the position of firms offering public cloud infrastructure and whether they pose any barriers to competition. This is an important issue to consider, as the cloud computing industry is growing rapidly and these firms have a lot of power.

The FTC's probe, announced Thursday, will focus on so-called "hyperscalers" like Amazon Web Services, Microsoft Azure and Google Cloud. These companies let businesses access computing power and data storage from remote servers, rather than host it on their own private infrastructure.

If the regulator finds that the companies are harming competition, it may take further action. Selina Chadha, Ofcom’s director of connectivity, said the regulator hasn’t yet reached a view on whether the cloud giants are engaged in anticompetitive behavior. Ofcom said it will conclude its review and publish a final report including any concerns and proposed recommendations within the 12 months. CNBC reached out to Amazon, Microsoft, and Google for comment, but none of the companies were immediately available.

Ofcom, the regulator for the broadcasting and telecommunications industries in the U.K., is set to launch a review as part of its wider digital strategy push.

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Ofcom plans to investigate other digital markets over the next year, including personal messaging and virtual assistants like Amazon's Alexa. The regulator is interested in how services like WhatsApp, Facetime and Zoom have impacted traditional calling and messaging, as well as the competitive landscape among digital assistants, connected TVs and smart speakers.

"Digital services have transformed the way we live, work, play, and do business," said Ofcom's Chadha in a statement Thursday. "However, as the number of platforms, devices, and networks that provide content continues to grow, so do the technological and economic issues confronting regulators."

The UK's Competition and Markets Authority (CMA) is launching a new program to investigate digital markets and identify any potential competition concerns."This is an important issue for people and businesses who rely on these markets," said CMA Chairwoman Andrea Coscelli. "We want to make sure they are working well for everyone."

Ofcom has been selected as the enforcer of strict new rules policing harmful content on the internet. However, the legislation, known as the Online Safety Bill, is unlikely to come into force anytime soon after Liz Truss replaced Boris Johnson as prime minister. With Truss' government grappling with a plethora of problems in the UK - not least the cost-of-living crisis - it is expected that online safety regulation will move to the back of the queue of policy priorities for the government.

This latest move from the FTC is just one more example of how regulators are cracking down on big tech companies. These companies are perceived to have too much control over different aspects of the digital economy, and this latest move is an effort to rein them in.

The Competition and Markets Authority (CMA) is investigating several Big Tech companies and wants additional powers to ensure a level playing field across digital markets. The European Commission has fined Google billions of dollars over alleged antitrust offences, is investigating Apple and Amazon in separate cases, and has passed landmark digital laws that may reshape internet giants’ business models.

Amazon's Amazon Web Services (AWS) division continues to dominate the cloud infrastructure services market, generating billions of dollars in profits each year. In 2021, AWS generated $62.2 billion in revenue and over $18.5 billion in operating income.

Microsoft's Azure is the first runner up in the cloud computing market, while Google is the third-largest player. Other firms, including IBM and China's Alibaba, also operate their own cloud arms.

According to Ofcom, Amazon, Microsoft and Google generate a combined 81% of revenues in the UK's cloud infrastructure services market, which is estimated to be worth £15 billion ($16.8 billion).

Microsoft has announced a number of changes to its cloud contract terms, making it easier for customers to use competing cloud platforms as well as Microsoft. The company had faced complaints from rivals in Europe that it was limiting choice in the market.

Adan Harris
Managing Editor
Eric Ng
John Liu
Editorial Board
Bryan Curtis
Adan Harris
Managing Editor
Cathy Hills
Associate Editor

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