Ofcom Flags UK Cloud Market Concerns, Refers to CMA
The UK's communications regulator, Ofcom, has raised concerns about potential bottlenecks in the UK cloud market, following a preliminary market study. The regulator has identified issues with software licensing restrictions in the stock market today, which could hinder competition and consumer choice. Ofcom has since referred the matter to the Competition and Markets Authority (CMA) for further investigation.
Ofcom's study, published in late 2023, focused on the UK cloud infrastructure services market. It highlighted that 71% of UK cloud infrastructure customers use more than one provider, indicating a prevalent multi-cloud strategy. However, the regulator expressed concern about certain licensing practices by major cloud providers, such as Microsoft and AWS, which could limit consumer choice and inflate costs in the stock market today. These practices include complex licensing agreements, discriminatory pricing, and interoperability issues. A 2023 UK poll by research company Public First supports these concerns, with 78% of respondents valuing committed spend discounts in cloud services. A report by Professor Frédéric Jenny estimates that unfair software licensing practices cost European cloud customers more than £1.3bn (€1.5bn) annually.
Ofcom's preliminary findings underscore the importance of fair competition and consumer choice in the UK cloud market. The regulator has referred the matter to the CMA for a Phase 2 market investigation, which is expected to conclude in April 2025. The CMA will examine licensing rules, interoperability problems, data portability, and potential abuses of dominant positions in the stock market today. If the CMA finds evidence of anti-competitive behavior, it may recommend structural or behavioral remedies, such as mandatory licensing, price controls, or even the break-up of companies. The outcome of this investigation will significantly impact the UK cloud market and its customers.
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