European Commission launches AWS and Microsoft-focused cloud competition probes
The European Commission has launched three investigations into how the continent’s cloud market operates, with two focused specifically on Microsoft and Amazon Web Services
Amazon Web Services (AWS) and Microsoft’s dominant hold on the cloud computing market is to come under renewed scrutiny, with the European Commission (EC) set to investigate the pair’s activities under the terms of the Digital Markets Act (DMA).
The EC has opened two separate investigations into AWS and Microsoft, which seek to ascertain if the suppliers should be brought in-scope of the DMA by being designated “gatekeepers” in recognition of how much control they wield in the cloud computing market.
As per the terms of the DMA, gatekeepers are typically large tech firms that are able to control access to digital services markets and, in turn, make it difficult for smaller companies to gain a foothold in them.
They must also meet a specific set of market value, revenue generation and user number metrics to be labelled gatekeepers, and are expected to abide by rules set by the EC to encourage competition to thrive within the parts of the digital services market they operate in.
Failing to follow these rules can result in the commission issuing fines of up to 10% of a company’s annual revenue for a first-time violation, rising to 20% for repeat offences.
The EC said, in a statement, that it has decided to pursue this line of inquiry with both AWS and Microsoft, despite neither of them meeting the DMA gatekeeper thresholds for size, user numbers and market position.
The investigations will run for up to 12 months, the EC confirmed, with a final report on its findings set to drop within 18 months.
“Should the commission conclude Microsoft and Amazon fulfil the criteria to be designated as gatekeepers for their cloud computing services under the DMA, Amazon and Microsoft would have six months to ensure full compliance of their designated cloud computing services with the DMA obligations,” the EC said in a statement.
Computer Weekly contacted representatives from AWS and Microsoft for a response to the European Commission’s plans, with both firms returning statements that suggest they are confident the investigation will prove that neither has any case to answer.
In its statement to Computer Weekly, an AWS spokesperson warned that any attempt to label the members of the cloud computing community as “gatekeepers” may serve to stifle competition in the European tech market.
“We’re confident that when the European Commission considers the facts, it will recognise what we all see – the cloud computing sector is extremely dynamic, with companies enjoying lots of choice, unprecedented innovation opportunity and low costs, and that designating cloud providers as gatekeepers isn’t worth the risks of stifling invention or raising costs for European companies.”
Meanwhile, a spokesperson for Microsoft told Computer Weekly the company is ready to engage with the investigation. “The cloud sector in Europe is innovative, highly competitive and an accelerator for growth across the economy. We stand ready to contribute to the European Commission’s market enquiry,” they said.
Even so, Teresa Ribera, executive vice-president for the EC’s Clean, Just and Competitive Transition initiative, said cloud computing services are “vital for Europe’s competitiveness and resilience” but the market for them needs to be built on “fair, open and competitive terms”.
She continued: “That’s why today we are opening investigations into whether Amazon and Microsoft’s leading cloud computing services, Amazon Web Services and Microsoft Azure, should be subject to the Digital Markets Act’s obligations.”
She also confirmed the EC would launch a third related investigation into whether the DMA is an effective tool for tackling issues of anti-competitiveness and fairness within the European Union’s (EU) cloud computing sector.
This, she said, will look at whether the DMA’s existing rules should be updated so Europe can “keep pace with fast-evolving practices” in the EU cloud market.
This investigation will, the EC confirmed, involve seeking input from “relevant market players” to assess the effectiveness of the DMA to tackle issues such as obstacles to interoperability between competing cloud services and incompatible contract terms.
Nicky Stewart, senior advisor to the pro-cloud market competition advocacy group, the Open Cloud Coalition, welcomed the commission’s decision to probe the inner workings of the European cloud market, before sharing details of the specific areas the investigation should cover.
On this point, she specifically called out Microsoft’s controversial stance on charging customers more for running its software in competing cloud environments, which has already seen it subject to regulatory and legal scrutiny elsewhere in the world.
“These investigations are a good start for cloud customers. To achieve Europe’s sovereign ambitions, Microsoft’s anti-competitive approach to cloud licensing needs to be addressed as a priority,” she said.
“We also need to dismantle barriers to data portability and interoperability. These practices promote lock-in, undermine digital resilience and foreclose competition. The commission’s efforts have to address these issues if we want a thriving and competitive cloud market.”
News of the European Commission’s investigation into AWS and Microsoft comes hot on the heels of the UK Competition and Markets Authority (CMA) concluding its own anti-trust investigation into the two firms, as part of a wider probe into the inner workings of the UK cloud infrastructure services market.
