Scrutiny over dominant cloud practices by Microsoft and Amazon
The UK’s Competition and Markets Authority (CMA) is doing what regulators should do, looking closely at market power that’s become concentrated in the hands of a few. This time, it’s the cloud computing space, targeting Amazon and Microsoft. The concern? These two control too much and make it too hard for others to compete. That’s not how a healthy market runs.
What we’re seeing here isn about control. Microsoft and Amazon control 30% to 40% each of the UK’s cloud infrastructure market, according to the CMA. That’s as close to a duopoly as it gets. Put together, they’re dominating roughly three-quarters of the infrastructure-as-a-service (IaaS) space. Google, the next closest competitor, only holds somewhere between 5% and 10%. That imbalance stifles the kind of competition that brings innovation and price fairness. And that’s exactly what the CMA is worried about.
Now, let’s talk about how this power gets maintained. Practices like egress fees, charging users when they want to move their data somewhere else, push customers to stay put. Combine that with pricing structures and technical setups that make switching a hassle, and you’ve got a lock-in system built for maximum retention. If you’re running a business and thinking about scaling cloud operations, you’re feeling the squeeze from both pricing and limitations in choice.
For regulators, the question is: At what point does dominance prevent others from competing at all? For enterprises, the risk is strategic, overreliance on one or two providers compounds long-term costs and limits flexibility. You get stuck not because of a better product or price, but because the switching tax is too high.
Nobody’s saying success should be punished. But control that blocks innovation and limits exit options? That’s a problem worth fixing.
Regulatory action like this should encourage enterprises to rethink dependencies and advocate for fairer practices in a market that serves as the digital backbone for nearly every modern business today.
Microsoft’s licensing practices favoring its own cloud platform
Microsoft’s licensing model isn’t neutral. That’s what the UK’s Competition and Markets Authority (CMA) is calling out. They’ve flagged that Microsoft makes it cheaper to run its Windows Server software on its own Azure cloud platform compared to running it on competing platforms. That pricing disparity shapes customer behavior, not based on performance or value, but on economics tilted by the license.
When a company makes its own products financially disadvantageous to use on a rival’s platform, that’s more than just competing hard. It restricts customer freedom. Businesses are less likely to choose alternative providers if the cost to do so is artificially higher. Over time, these licensing terms reinforce market share, not because of best-in-class performance, but because they suppress alternatives before the market can validate them.
For decision-makers, this kind of structural bias in the pricing system limits strategic options. If your architecture depends on Microsoft technologies, and you don’t use Azure, you’re paying more. That cost compounds at enterprise scale. You’re not just making IT choices; you’re dealing with embedded inefficiencies that shape budget and roadmap planning. And when alternatives aren’t cost-effective due to licensing rules, innovation starts to narrow.
From a market health perspective, this reduces pressure to compete. It discourages interoperability. It slows down broader ecosystem growth. Regulators see that and know it’s not simply about one vendor winning, it’s about others not even getting a fair chance to try. The broader enterprise cloud market needs more room to evolve. Licensing structures that favor the incumbent restrict that progress.
Microsoft’s position is strong. But if that strength relies on locking customers into an artificially cheaper ecosystem, the market isn’t working the way it’s supposed to. And the CMA is stepping in to address exactly that.
Regulatory push under the new digital markets, competition and consumers (DMCC) act
The UK is changing the rules of the game.
The Competition and Markets Authority (CMA) is recommending that Microsoft and Amazon face a full-scale investigation under the Digital Markets, Competition and Consumers (DMCC) Act. This is not just procedural. It signals that the UK is ready to enforce stricter oversight on firms that reach “strategic market status”, companies whose dominance can distort entire markets.
The cloud infrastructure space falls under that lens now. When regulators believe scale and market power are creating structural barriers to competition, the DMCC gives them the tools to intervene. That includes regulating pricing fairness, business conduct, and promoting data portability across providers. It’s a system designed to prevent dominant players from entrenching their lead in ways that harm market dynamics.
For C-suite executives, particularly those leading digital transformation or managing tech partnerships, this matters. Any shift in regulatory policy affects vendor strategy, procurement, and risk assessments. If your cloud partners are subject to new obligations or face constraints on their competitive practices, service offerings, contract terms, and pricing models will likely evolve.
What’s different now is the scope of action. Unlike older regulatory frameworks, the DMCC is proactive. It lets regulators intervene before markets are completely locked in. The EU is already moving in a similar direction, which signals where the global momentum is headed, closer scrutiny, early enforcement, and market correction before dominance becomes irreversible.
Enterprises should expect a shift. Paying attention now is essential. Cloud strategies built for flexibility, interoperability, and risk diversification will have a long-term edge. The regulatory environment is catching up to technological change. That creates risk, but also opportunity.
Divergent industry responses highlighting varied perspectives
Not everyone is aligned on the CMA’s push. While the regulator sees structural risk and a need for intervention, Microsoft and Amazon see disruption to a competitive, fast-evolving market. Their responses were firm, and defensive.
Microsoft pushed back by stating the cloud industry remains highly dynamic, especially with the rise of AI-driven tools and new platform entrants. From their standpoint, the CMA is focusing too narrowly, and notably overlooking Google, which also operates at global scale. Amazon added that a deeper probe risks damaging the UK’s reputation as a stable, innovation-friendly tech environment. According to their spokesperson, this move could make the UK a “global outlier” in digital policy, potentially deterring investment and slowing momentum in a key sector.
Google, by contrast, supported the CMA’s direction. Chris Lindsay, Vice President at Google, called it a “watershed moment” for UK enterprises. He welcomed the investigation and noted that it could lead to lower costs and more cloud choices for businesses. Google stands to benefit from measures that limit the market power of its larger competitors.
From a business leadership perspective, this divergence reflects real tension between compliance risk and market opportunity. For dominant players, tighter regulation introduces uncertainty and potential friction in decision-making and long-term planning. For challengers, it opens competitive space that previously didn’t exist.
As this unfolds, enterprises will need to monitor how regulatory shifts change pricing models, licensing terms, and interoperability options. Cloud service dependencies aren’t just technical decisions, they’re tied to vendor strategy and government oversight. Filtering out company narratives from market impact is essential. Alignment with a vendor that’s exposed to regulatory crackdowns may present reputational and strategic risk. At the same time, supporting broader competition creates leverage and flexibility in IT strategy.
Executives should read these responses not just as policy positions, but as strategic signals. The ground is shifting. Some will resist it, others will adapt to it faster. That’s where competitive edge starts.
Key takeaways for decision-makers
- Cloud dominance scrutiny: UK regulators are challenging Microsoft and Amazon over cloud market concentration, citing pricing control and limited switching options. Leaders should reassess cloud vendor exposure and renegotiate terms where dependency risk is high.
- Licensing practices under fire: Microsoft’s pricing advantages for its own cloud services are under investigation for distorting competition. Procurement teams should evaluate total licensing costs across providers to ensure long-term flexibility and avoid hidden lock-in.
- Regulatory shift on the horizon: The DMCC Act signals more aggressive interventions aimed at dominant tech firms, with stricter oversight likely to follow. Executives should expect compliance costs and market dynamics to shift and prepare for vendor diversifications.
- Industry reactions split: Amazon and Microsoft oppose the scrutiny, while Google supports regulatory action that could increase competition. Leaders should read these divergent stances as strategic signals and position partnerships with adaptability in mind.
