Microsoft, AWS rebut CMA Cloud Report, claim it 'Missed the Mark' on competition

The UK’s Competition and Markets Authority (CMA) has released a final report on its cloud services market investigation, concluding that competition is not working well and that the sector is dominated by a few key players. However, the findings have been met with fierce pushback from the two biggest companies in the market, Microsoft and Amazon Web Services (AWS), who argue the report fails to accurately reflect the reality of a dynamic and competitive industry.

The CMA’s report, which was the culmination of a multi-year investigation, singled out Microsoft and AWS for having a "significant unilateral market power" in the UK. The watchdog's key concerns centered on two main issues:

• Egress fees: The report found that high data transfer fees, which are charged when customers move data out of a provider’s cloud, create a significant barrier to switching, effectively locking in customers.

• Microsoft's licensing practices: The CMA heavily criticized Microsoft for its licensing models, which it claims make it more expensive and difficult for customers to run Microsoft software on rival cloud platforms like AWS and Google Cloud.

In response, both Microsoft and AWS issued strong rebuttals. A Microsoft spokesperson stated that the report "misses the mark again," arguing that it "ignores that the cloud market has never been so dynamic and competitive, with record investment, and rapid, AI-driven changes."

The company also criticized the report for not including Google, which it described as one of the "fastest-growing cloud market participants."

Similarly, an AWS spokesperson said the report "disregards clear evidence of robust competition" and warned that the proposed remedies "risk making the UK a global outlier" at a time when regulatory stability is needed.

AWS also defended its practices, arguing that its data transfer fees are not a barrier to switching and that its differentiated services are evidence of a healthy, competitive market, not a lack of competition.

While the CMA's final report stops short of imposing immediate remedies, it recommends using new powers under the Digital Markets, Competition and Consumers (DMCC) Act to designate Microsoft and AWS with "Strategic Market Status" (SMS). This would allow the regulator to impose legally binding conduct requirements, such as mandating interoperability or price transparency.

Smaller cloud providers and competitors, including Google, have largely supported the CMA's findings. A Google Cloud spokesperson called the conclusion on Microsoft's licensing practices a "watershed moment for the UK" and urged swift action.

Still, the CMA has been criticized by some industry observers for not acting quickly enough, as any new investigation under the DMCC Act would not begin until 2026. This delay, critics argue, leaves the market vulnerable to further consolidation while customers continue to face the very issues the report identifies.