Ofcom launches investigation into the tech giant’s cloud computing dominance

Ofcom has launched a major investigation into the dominance of Amazon, Google and Microsoft in the cloud computing industry.

The regulator will scrutinize the companies to ensure their influence on cloud computing, messaging and smart devices is working effectively for individuals and businesses in the UK, the watchdog said.

Known as ‘hyperscalers’, the three giants control over 81% of the UK’s cloud computing market, said to be worth a whopping £15bn.

Smart devices like Amazon’s Echo and Google’s Nest are under scrutiny as the regulator hopes to ensure their impact on consumer behavior doesn’t hurt markets for online, radio and TV content.

“The way we live, work, play and do business has been transformed by digital services,” said Selina Chadha, director of connectivity at Ofcom, in a statement.

“But as the number of platforms, devices and networks that deliver content continues to grow, so do the technological and economic problems that regulators face.”

Matt Barker, CEO and co-founder of cloud-native technology company Jetstack, narrates Verdict This story repeats itself with the Hyperscaler trio.

“The hyperscalers are relentlessly consuming open-source software and offering it as part of their services, leaving companies with little choice but to work with them,” says Barker.

Amazon, Google, and Microsoft have all attracted new customers with big discounts on storage and hosting, meaning smaller cloud computing companies can’t afford to keep up.

“Once everything is up and running, it becomes extremely costly for the customer to move all the services set up to another provider, which ties the business to the big technology provider,” says Gaël Duval, CEO of Murena Cloud, a developer. Googled cloud service and data protection, told Verdict.

“The reality is that users rarely get the experience they’re looking for from the Big Three,” said Mark Boost, CEO of cloud-native service provider Civo Verdict“Our research found that 34% of organizations used five or fewer services from AWS, Google, or Azure.

Boost hopes the investigation will be the “beginning of a process to create a fairer and more competitive cloud market.”

“This must build on the core principles users have come to expect from the cloud: a reliable, affordable service that is low in complexity and offers the fast startup times that are essential for the modern developer,” he adds.

Ofcom’s investigations are conducted by the Enterprise Act 2002. The law allows the regulator to issue market studies for digital communications and to scrutinize business practices and contract terms.

Ofcom’s investigation is just the latest in a series of investigations launched against cloud computing providers.

Financial regulators like the Prudential Regulation Authority and the Financial Conduct Authority are also stepping up their scrutiny of cloud computing giants.

Laura Petrone, thematic analyst at GlobalData, narrates Verdict: “We will scrutinize this market more closely as government and private organizations increasingly rely on cloud services from major cloud providers due to a wave of migration to the cloud triggered by the pandemic.

“We are also seeing some vendors changing their behavior in part to avoid a full investigation, as in the case of Microsoft reviewing its licensing agreements to avoid a full antitrust investigation from Brussels.”

GlobalData is the parent company of Verdict and its sister publications.

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