Ofcom is set to probe Google, Amazon and Microsoft’s dominance in the UK cloud services industry.

Due to launch in the coming weeks, the probe will assess the position of the three “hyperscalers” in the £15bn public cloud infrastructure services market and identify any potential barriers to competition and growth.

Collectively, Amazon Web Services (AWS), Microsoft and Google currently generate around 81% of revenues in the UK’s cloud services market.

Due to the rapid evolution of the space, Ofcom said it is crucial to identify potential competition issues early.

UK Cloud Probe

As part of the probe, Ofcom revealed it will assess whether the dominance of the hyperscalers limits “innovation and growth” or potentially inhibits other companies from entering the market.

Upon launch, the study will invite “initial views” on the state of the cloud market from “interested or affected parties”.

If the regulator finds that competition is being stifled it can take further action, such as recommending changes to government regulations or policies.

A report on the investigation is expected to be published within the next year.

Long-term implications

Paul Stone, senior counsel at Charles Russell Speechlys said the market probe could act as a “catalyst for a full-blown market investigation”, which would likely have a significant long-term impact on big tech companies.

He said: “Ofcom’s probe into the cloud market is indicative of increasing scrutiny being placed on the big tech sector by UK competitions regulators.

“Given that Ofcom appear to be concerned about market entry, measures they could implement include limiting any exclusivity arrangements used by the ‘hyperscalers’ or requiring interoperability with new players.”

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Ofcom’s cloud services probe is part of a wider investigation into Britain’s digital communications market.

Over the next year, the regulator said it will examine other digital markets, including online personal communications apps such as WhatsApp, FaceTime and Zoom.

Ofcom will investigate how these platforms are affecting traditional calling and messaging services, and assess how competition in these markets may evolve in the coming years.

The regulator will also assess competition in the digital assistant, smart speaker and connected TV space.

Selina Chadha, Ofcom’s director of connectivity said the investigation will make sure that digital services are “working well for people and businesses who rely on them”.

She commented: “The way we live, work, play and do business has been transformed by digital services. 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.”

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