Competition in the UK's cloud computing market is to be subject to an investigation due to worries that Amazon and Microsoft have too much control.
The UK's media sector is mainly comprised of two companies - Ofcom reported that they make up 70-80% of the sector, while Google - the closest rival - holds 5-10%.
In April, Ofcom expressed concerns that a lack of competition made it hard for companies to switch suppliers.
The UK's Competition and Markets Authority (CMA) has been asked to investigate the sector.
Storing data on the web for the purpose of being able to access it remotely and at any given time is what's commonly known as cloud computing.
Businesses in the UK have made use of the services, and Ofcom anticipated that the cloud services sector in the UK could have a value as high as £7.5bn in 2022.
Sarah Cardell, chief executive of the CMA, commented that cloud services are now so integral to many businesses that it is essential to have a successful level of competition in this sector.
Competitive rivalry is necessary to ensure that the digital marketplace remains fair, so that no single entity gains too much control and gets the upper hand. This allows us to realise the full potential of these fast-paced digital markets, and allows people, businesses, and the entire British economy to gain maximum benefit.
The independent inquiry group appointed by the CMA will undertake an investigation to see if competition in this market is effective, and if not, what should be done to rectify any problems identified.
The CMA declared it would finish its inquiry by April 2025.
Cloud computing is now a crucial piece of infrastructure for businesses and people alike.
Millions of people use it to store large quantities of data, access software remotely, stream audio and video media, and engage in gaming.
It is sometimes referred to as employing "other people's computer systems", harnessing extensive networks of efficient CPUs housed in huge data centres located all around the planet, a great many of which are property of Amazon or Microsoft.
I was informed by a UK business that its software is much more costly to utilize unless it is employed on Microsoft's Azure cloud platform.
The Competition and Markets Authority has the authority to compel companies to adjust their practices, hinder acquisitions or even divest divisions of their organizations if it believes there is a valid danger to the market.
Nicky Stewart, former head of ICT at the Cabinet Office, commended Ofcom for finally addressing anti-competitive issues such as data egress fees, technical and commercial lock-ins, which have been a hindrance to the development of the UK's cloud infrastructure market for a long period.
It is essential that the CMA conduct a thorough examination of all the core problems in this significant market, which supports a great deal of our country's digital backbone - and that covers anti-competitive licensing as well.
Fergal Farragher, the head of consumer protection for Ofcom, informed the BBC's Today programme that cloud computing is the 'invisible infrastructure' providing businesses and customers with the digital services they utilize on a daily basis.
He acknowledged that Ofcom was apprehensive that competition was not performing optimally in the cloud computing sector.
UK businesses have relayed to us that they are encountering issues when changing to and combining the optimum services from numerous cloud providers, he added.
Ofcom have expressed worries that certain impediments, such as charges providers impose for switching data to a competitor, can act as a deterrent to customers wanting to use different services.
Mr Farragher suggested that the fees should be capped, or else removed.
Ofcom referred the cloud services market to the CMA in order to guarantee that the market will be effectively serving the needs of UK consumers and businesses in the future.
He noted that IBM and Oracle should be in a position to contest the more influential participants.
A Microsoft representative declared that they are devoted to making sure that the cloud industry in the UK stays creative, fiercely competitive and a stimulator for expansion all over the economy.
We will work cooperatively with the CMA while they investigate the Cloud Services Market.
Amazon claimed that Ofcom's discoveries were misconstrued, forming a misguided basis.
The spokesperson for the company indicated that only a minor portion of IT spending is allocated to the cloud, and customers have the possibility to satisfy their IT requirements from a selection of on-site hardware and software, managed or co-location services, as well as cloud services.
Customers conduct hundreds of millions of data transfers in the regular course of operations every day, and more than 90% of them do not incur any costs associated with data transfer because we offer a complimentary 100 gigabytes per month.
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