‘Misses the mark’: Microsoft, AWS hit out at CMA cloud competition report
The CMA claims Microsoft and AWS are harming competition – the duo strongly disagree


The UK Competition and Markets Authority (CMA) has accused Microsoft and Amazon of harming competition in the country’s cloud computing market.
Following a long-running probe into the state of the industry, the regulator warned competition in the space is “not working well”, highlighting an array of business practices it said hampers competition.
The probe pointed specifically to a trend of market concentration in the Infrastructure as a Service (IaaS) space, noting that Amazon and Microsoft command “significant unilateral market power”.
Amazon and Microsoft are the two largest providers in this domain, each of which controlled a share of the market ranging between 30-40%, as of 2024.
The Platform as a Service (PaaS) market also showed signs of concentration, according to the CMA, with Microsoft’s share having increased to 20-30% since 2020.
All told, this market concentration is hampering the ability of competitors to enter the space, the CMA alleges.
“There are substantial barriers to entry and expansion in cloud services, particularly in IaaS as this requires significant capital investment in fixed assets such as data centers, networks and servers, and components which become largely a sunk cost,” the CMA report reads.
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“There are also economies of scale, meaning that larger cloud providers have lower average costs compared to smaller providers,” it added.
“The largest cloud providers are making substantial investments in IaaS and AI capabilities to expand their services in coming years, and while this investment can have pro-competitive effects and benefit cloud customers, it may also deter market entry or expansion by potential rivals.”
The enterprise impact of cloud practices
A key focus of the CMA probe has been egress fees. The regulator noted that the number of customers switching suppliers each year was low – only around 1% – it suggested this could be more to do with barriers to doing so rather than businesses’ preferences.
“Customers face both commercial and technical barriers when seeking to multi-cloud or switch their cloud provider and many currently think that the costs outweigh the benefits,” the report noted.
“Barriers to multi-cloud negatively affect many customers’ ability to use and integrate multiple public clouds, and this limits customers’ ability and incentive to exercise choice over their cloud provider."
This applies equally to small businesses and larger enterprises, the CMA said, with the former lacking the financial resources and the latter facing high fees due to the large quantities of data they have stored in the cloud.
In addition to cloud-related concerns, the CMA also took issue with Microsoft’s licensing practices. It argued that the tech giant incentivizes customers to use Windows Server through its Azure cloud service rather than competing options.
This, the regulator noted, “further restricts” the limited choices faced by enterprises.
Recommendations outlined by the CMA report include a further investigation into AWS and Microsoft under the Digital Markets, Competition and Consumers (DMCC) Act.
“We recommend that the CMA Board use its digital markets powers to prioritize commencing SMS investigations to consider designation the two largest providers, Microsoft and AWS, with strategic market status in relation to their respective digital activities in cloud services,” the report states.
Microsoft and AWS hit back at CMA ruling
Microsoft and AWS have hit back at the regulator in the wake of the ruling. A Microsoft spokesperson said the report “misses the mark again”, and claimed the industry has “never been so dynamic and competitive”.
“Its recommendations (also) fail to cover Google, one of the fastest-growing cloud market participants,” the spokesperson said.
“Microsoft looks forward to working with the Digital Markets Unit toward an outcome that more accurately reflects the current competition in cloud that benefits UK customers.”
A spokesperson for AWS issued an equally scathing response to the report, saying it “disregards clear evidence of robust competition” in the UK 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,” the spokesperson said.
“It risks making the UK a global outlier at a time when businesses need regulatory predictability for the UK to maintain international competitiveness. We will continue to engage constructively with the CMA as they consider their next steps.”
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Ross Kelly is ITPro's News & Analysis Editor, responsible for leading the brand's news output and in-depth reporting on the latest stories from across the business technology landscape. Ross was previously a Staff Writer, during which time he developed a keen interest in cyber security, business leadership, and emerging technologies.
He graduated from Edinburgh Napier University in 2016 with a BA (Hons) in Journalism, and joined ITPro in 2022 after four years working in technology conference research.
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