Ofcom launches investigation into tech giant's dominance of cloud computing

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

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

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

The three giants, known as the “hyperscalers”, control more than 81% of Britain’s cloud computing market, which is thought to be worth £15bn.

Smart devices like Amazon’s Echo and Google’s Nest will be under the microscope as the regulator hopes to ensure their effects on consumer behavior do not affect the market for online content, radio and television.

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

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

Matt Barker, CEO and co-founder of cloud-native technology company Jetstack, says Verdict let history repeat itself with the hyperscaler trio.

“Hyperscalers are fiercely consuming open source software and offering it as part of their services, leaving companies with no choice but to work with them,” Barker says.

Amazon, Google and Microsoft have been luring in new customers with deep discounts on storage and hosting, which means smaller cloud companies are struggling to afford to keep up.

“When everything is in place and working, it then becomes extremely costly for the customer to move all the services in place to another supplier, which locks the company into the big technology supplier”, Gaël Duval, CEO of Murena Cloud, a de- Googled cloud service and privacy, tells Verdict.

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

Boost says it hopes the survey will be the “beginning of a process to create a fairer and more competitive cloud marketplace.”

“It should be built on the core principles users expect from the cloud: reliable, reasonably priced, low-complexity, and delivering the fast launch times essential for the modern developer,” he adds.

Ofcom’s investigations will be carried out under the Enterprise Act 2002. This law allows the watchdog to publish market research into digital communications and scrutinize business practices and contract terms .

Ofcom’s investigation is just the latest in a series of open inquiries into cloud computing providers.

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

Laura Petrone, Thematic Analyst at GlobalData says Verdict“We will be doing more of this market scrutiny as government and private organizations increasingly rely on cloud services from large cloud providers following a wave of cloud migration triggered by the pandemic.

“We also see some vendors changing some of their behavior to avoid a full investigation, such 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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