The UK’s competition regulator has found that the cloud market is “not working well” and is anti-competitive, prescribing specific requirements for Microsoft and Amazon.

The Competition and Market Authority’s final report on the UK cloud market found that Amazon Web Services and Microsoft hold dominant positions in the cloud market, driving down competition and therefore, hurting consumers.

The CMA’s report hit out at Microsoft in particular over its costs to Amazon and Google customers looking to use its software.

Under its new powers, the CMA can take action on organisations deemed to have strategic market status in order to fix any competition concerns.

The report recommends that “this would enable the CMA to impose targeted and bespoke interventions to address the concerns we have identified, including with respect to features where there are specification risks around the design of effective market interventions.”

Microsoft and Amazon have yet to be designated as having strategic market status in the cloud market, but the CMA is now launching a probe into this, which could come into effect in 2026.

A lack of competition in the cloud market could be driving up costs, offering consumers less choice, and staling innovation, the CMA found.

AWS and Microsoft, for which Azure is its cloud offering, each hold about 30 to 40% of the cloud market, while Google has just over 10% of the market.

Microsoft has come out against the CMA’s findings, saying that the report “misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment and rapid, AI-driven changes.”

A Microsoft spokesperson also said that the CMA recommendations “fail to cover Google, one of the fastest-growing cloud market participants.”

An AWS spokesperson said that the report “disregards clear evidence of robust competition in the UK’s IT services industry.

“The action proposed by the inquiry group is unwarranted and undermines the substantial investment and innovation that have already benefitted hundreds of thousands of UK businesses.”

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Google, however, welcomed the report, saying that the CMA should take “swift action.”

“The conclusive finding that restrictive licensing harms cloud customers and competition is a watershed moment for the UK,” Chris Lindsay, Google Cloud’s vice president of customer engineering in EMEA said.

“Swift action from the (CMA’s) Digital Markets Unit is essential to ensure British businesses pay a fair price and to unleash choice, innovation and economic growth in the UK.”