Time for Britain's CMA to strike hard – or risk losing the cloud competition fight
- Reference: 1752833770
- News link: https://www.theregister.co.uk/2025/07/18/comment_on_cma/
- Source link:
As the Competition and Markets Authority (CMA) highlighted in its provisional findings earlier this year, this crucial foundation is currently shaky. Amazon Web Services (AWS) and Microsoft Azure collectively dominate around 80 percent of UK cloud spending, exhibiting classic and adverse signs of entrenched market power. Their practices – from high exit fees and vendor lock-in, to preferential licensing and limited technical interoperability – are stifling competition and threatening the very innovation the government seeks to foster.
The CMA's investigation has shone a spotlight on these concerning practices, recognising that a truly competitive cloud landscape is essential for nurturing a flourishing AI innovation ecosystem. If businesses are locked into a handful of providers, their ability to experiment, scale, and develop cutting-edge AI applications will be severely constrained.
Cloud market working well ... if you're AWS and Microsoft [1]READ MORE
The CMA has the tools – and the mandate – to act now
Fortunately, the CMA is equipped with new powers under the [2]Digital Markets, Competition and Consumers Act 2024 . These allow for "targeted interventions," including designating AWS and Microsoft as firms with Strategic Market Status (SMS). Such a designation would enable powerful remedies.
The CMA could mandate interoperability standards and open APIs to break down technical barriers, compelling providers to publish standardised data schemas and export tools. Capping or banning exit fees, which primarily deter switching, is another crucial step. Furthermore, addressing Microsoft’s discriminatory licensing practices, which favour Azure, is essential. The CMA could insist on cloud-agnostic licensing terms for all providers, leveling the playing field.
[3]
Finally, imposing pro-competition rules, such as mandatory "exit-support services" and no-tying clauses, would prevent further market distortion.
[4]
[5]
These are not merely theoretical remedies. The CMA has a proven track record, demonstrated by its 2014 retail banking investigation and subsequent Retail Banking Market Order in 2017, which was instrumental in unlocking competition and innovation, laying the foundation for the UK’s world-leading Open Banking ecosystem and delivering lasting benefits to consumers and the wider economy. Through binding orders, the CMA forced major banks to adopt common open APIs and data-sharing standards, successfully stimulating fintech innovation. Similar resolve is now imperative in the cloud market.
Why delay equals defeat
A subdued or delayed remedy framework, however, risks being toothless. Robust protections demand mandatory, not voluntary, obligations; rapid implementation within 6-12 months; and substantial penalties for non-compliance. Without these, AWS and Microsoft will continue to solidify their dominance, making barriers to entry increasingly impenetrable, even as AI becomes more integrated into every business strategy. This is essentially running out the clock.
The CMA faces a critical juncture. Its final report could lead to immediate remedy implementation or a detrimental 18-24 month regulatory pause if referred to the new Digital Markets Unit (DMU). After years of painstaking investigation, having preliminarily decided that restrictive licensing practices are anticompetitive, such a delay is untenable. During this time, cloud markets would further consolidate, making interoperability harder to reverse. Crucially, clarity and price transparency are vital for AI development, and any deferral could derail the UK's AI ambition.
The CMA already possesses the mandate, evidence, and legal powers; hesitation would undermine its credibility and the government’s digital competition agenda.
AI intensifies the urgency
Microsoft's counter-argument, suggesting the CMA's inquiry ignores AI’s role and that delayed intervention could backfire, is disingenuous. The reality is that the widespread adoption of AI will only reinforce hyperscaler lock-in due to the massive compute demands, specialized services, and co-development involved.
If left unchecked, Microsoft and AWS will use AI innovation as another mechanism to tighten their incumbency. Allowing hyperscaler lock-in to persist risks stifling the UK’s AI sector by limiting choice, inflating costs, and restricting access to the diverse and scalable computing resources essential for innovation, experimentation, and fair market growth. It is precisely because AI is so transformative, and its impact is immediate, that the CMA must prevent infrastructure markets from ossifying into a two-player oligopoly.
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The CMA knows this is a problem. It is mandated to spur economic growth and innovation. So why is the plan to delay when immediate action is both possible and necessary?
The path forward: Act now, refer later
[7]'Close to impossible' for Europe to escape clutches of US hyperscalers
[8]Google, AWS say it's too hard for customers to use Linux to swerve Azure
[9]AWS claims 50% of Azure workloads would jump ship if licensing costs allowed
[10]Microsoft: So what if it costs 4X as much to run Windows Server in AWS, Alibaba, and Google?
[11]AWS claims customers are packing bags and heading back on-prem
For the UK to foster competitive cloud markets and spur broad-based AI innovation, the CMA must implement targeted interventions swiftly. Pro-portability and anti-discrimination rules should be made binding with regular compliance reviews, and exit-fees either banned or capped with standardised tiers announced at the final report's publication. Real-time monitoring and enforcement, including audits and fines, are essential to keep hyperscalers accountable. Maintaining regulatory momentum by avoiding a prolonged DMU referral is paramount.
The CMA has done the hard work of diagnosing deeply entrenched structural concerns in the cloud-AI stack. Delay risks this vital work unravelling. Now is not the time to hesitate. The market cannot afford to wait. The CMA must act decisively now, before it's too late. ®
Bill McCluggage is the former UK deputy government CIO, Irish government CIO and is currently managing director at consultancy Laganview Associates.
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[1] https://www.theregister.com/2025/01/28/microsoft_and_aws_cma_provisional_findings/
[2] https://www.legislation.gov.uk/ukpga/2024/13/contents
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aHpvlosJymEIiDBgnz62wQAAAhA&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aHpvlosJymEIiDBgnz62wQAAAhA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aHpvlosJymEIiDBgnz62wQAAAhA&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offprem/paasiaas&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aHpvlosJymEIiDBgnz62wQAAAhA&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[7] https://www.theregister.com/2025/05/22/ditching_us_clouds_for_local/
[8] https://www.theregister.com/2025/04/17/swapping_linux_for_microsoft_is_hard/
[9] https://www.theregister.com/2025/04/16/aws_microsoft_license_harms/
[10] https://www.theregister.com/2025/03/04/microsoft_blasts_uk_market_regulator/
[11] https://www.theregister.com/2024/09/17/aws_cma_investigation/
[12] https://whitepapers.theregister.com/
"will it hold AWS and Microsoft's feet to the fire?"
No, don't be daft. I'm staggered anybody would even think this a valid question.
The last head of the CMA, Marcus Bokkerink, was given the boot by this government for (quite remarkably) not being "business friendly" enough, and replaced by Douglas Gurr, a former country manager for Amazon UK. Hmm, will he hold Amazon's feet to the fire? And with both Amazon and Microsoft making or promising multi-billion DC investments in the UK....?
Moreover, in recently updated guidance to the CMA, government set out priorities the CMA must consider, and the FIRST priority is "prioritising pro-growth and pro-investment interventions".
So again, no, the CMA will not hold ANYBODY's feet to the fire, if they're big tech, US companies, or any other multinational tax dodgers.
As I've said before...
Even the whole EU cloud industry can't compete with AWS or Azure, never mind the UK.
Why? Because the reasons are exactly the same as for the UK:
a) they don't want to and they are too lazy, too slow, inept, and in the UK it'd end up as a digital version of HS2. It's easier to use "someone else's computer", regardless of data sovereignty
b) it needs masses of financial investment and spare hardware capacity
c) they don't have the imagination or business acumen. Remember Amazon was just a bookseller. EU businesses are one trick ponies
d) in the EU and UK it simply takes regulators, governments, and businesses too long to make decisions. JFDI is an alien concept and not invented here
Re: As I've said before...
That’s not a failure of imagination - it’s design. The UK doesn’t want a book seller to become a cloud giant. Any spare capital gets bled out via business rates, punitive taxes, and regulatory micromanagement. Try reinvesting? Good luck. Then the government takes your taxed-to-death revenue and hands it straight to AWS or Azure - and later whines that there’s no domestic competition.
This isn’t just economic sabotage - it’s institutionalised class suppression. In the UK, a bookseller daring to become a tech giant is seen as getting above their station. If you're not privately educated and clinking glasses at Whitehall dinners, your ambition is treated like a threat - and punished accordingly. The system’s designed to keep you in your place while pretending it's meritocratic.
That’s why we don’t get British Amazons. Not because we can’t - but because we’re not meant to.
A potential Brexit Benefit
For decades the UK has rolled out toothless regulators which only really exist to give an appearance of "doing something"(*) or worse, had trade associations wrap themselves in the cloak of "industry self-regulation", then calling themselves regulators and making out that they have a government mandate (ASA, ICSTIS/PPP, etc), in order to avoid the government stepping in and regulating sectors which really _DO_ need regulation rather than "old boys' clubs"
Thanks to Brexit it may be forced to actually make these regulators and quangos fit for purpose. It's a faint hope but it's at least a hope
(*) That works when inside the EU because a government can't be forced to enforce its laws without embarking on an elephant-breeding exercise. Once outside the EU, it can be a matter of "Do it to our satisfaction or you don't get trade access" (Whether said by the EU, USA, China or one of the three other large economic players)
Re: A potential Brexit Benefit
"Thanks to Brexit it may be forced to actually make these regulators and quangos fit for purpose. It's a faint hope but it's at least a hope"
And it's an ill-founded hope.
I'm a regulator and a civil servant, and there's currently a unicorn hunt been started in all UK regulators at the behest of HMT to reduce the administrative burden on business of regulation by around 25%. Of itself that's admirable, excepting that (a) governments of all persuasions have been prattling on about reducing regulation for about thirty years* with few perceptible benefits, and (b) there's no baseline or accurate measure of what that burden is, and (c) government have been clear that they want regulators to reduce their burden on business, but politicians don't intend to actually remove or reform any statute law.
Which of those counts most? That they've tried this since forever and its never worked before, that they don't know what the 100% that they want to reduce to 75% is, or that all of the rules remain in place? I'd say they're all equally important in guaranteeing that the crusade will fail. Even whilst promising to reduce the burden of regulation, the apparatus of state continues to roll more into (e.g.) minimum wage, employee entitlements, NI costs, pension obligations, stillbirth leave etc etc and that mindset is not changing. Pointless garbage reporting like corporate environmental disclosures, modern slavery reporting, or equal pay reporting** will all remain. But apparently just by telling regulators to ask fewer questions of business the government think that they'll save business around £5bn*** a year.
There's a huge conflict between what ministers want and what can be delivered, the civil service is poor at offering good, practical solutions to ministers, the civil service has too many dossers amongst the Senior Civil Service, and said SCS are simply not held to account when things go wrong. If government want regulation to cost business less, then THEY need to remove some even many of the regulations they've passed, they need to bash the civil service into modernity, and when setting targets to reduce something they need to have an accurate idea of what that something is.
* e.g. The Better Regulation Task Force of 1997, the Bonfire of the Quango's in 2010, the Growth Duty in 2013 and since, plus others.
** There are regulations in place, just enforce those rather than wasting every law-abiding companies time and resources having to report that they're not breaking the law.
*** I did say no baseline; To be fair somebody did take a "plucked from my arse" estimate from 2015, inflated it by an arbitrary amount, and came up with the idea that regulators currently cost business around £25bn a year. Assuming a fully loaded average labour cost of £52k, that would imply that 480,000 FTE of private sector do NOTHING but fill in forms for regulators. Like 'em or loathe 'em, how credible do you think that is?
The CMA should just make itself
redundant for all the good it has done.
Google, MS, AMAZON and the rest have this cloud crap sewn up tight.
Time for the UK Gov to tax them dearly otherwise, we are truly FSCK'd as a country.
Lets face it people, we are broke. Just like when Gordo Brown stopped being PM. We can't go on like this forever and before anyone pipes up, Farage and Reform are merely Trump/MAGA light.
CMA may come to damning conclusion on current state of play, but the Government is so weak and will bend over and take it, while the corrupt senior Civil Service masters are bed hoping with the tax shy megacorps for their next pay packet, nothing will get done, just waffle, promise, smoke and mirrors, business as usual.
Not a lot of enthusiasm here
Then again, there's not much to be had.
But saying that you're broke ? I think that's going a bit too far.
You are generating wealth. You're just not the ones that are benefitting from it.
Clowns
Let’s be honest - the CMA isn’t about to save the UK’s digital future. This reads like bureaucratic theatre designed to show voters the government is doing something , while the real agenda - handing the UK’s digital infrastructure to foreign tax-shy giants - continues unchecked.
We’re told that “exit fees, vendor lock-in, and preferential licensing” are stifling innovation. Yet who exactly cemented this stranglehold? The government itself - by making AWS, Azure, and pals the default destination for public sector data. If these practices are so dangerous, maybe Whitehall should stop buying into them first. Lead by example, not by press release.
This isn't “market reform.” It’s a cynical performance. The same officials who crippled domestic providers with IR35, procurement rules, and hostile tax treatment now pretend to wring their hands over the dominance they actively created. Meanwhile, real competition - British, independent, and agile - was priced and legislated out years ago.