The UK’s Competition and Markets Authority (CMA) has raised the stakes for the global cloud industry, concluding its 21-month investigation with a stark warning over the dominance of Microsoft and Amazon in the nation’s cloud infrastructure market. Together, the two US tech giants control up to 80 percent of UK cloud services, according to the CMA’s final report released this week, with “high switching costs, restrictive licensing, and entrenched technical barriers” stifling both competition and customer choice.
The CMA found that Amazon Web Services and Microsoft Azure each account for between 30 and 40 percent of UK market share, with Google trailing at below 10 percent. “Competition is not working as well as it should in this market,” the watchdog stated, highlighting a set of obstacles that make it difficult for UK businesses to change or multi-source cloud providers. These include expensive data “egress fees” — penalties for moving customer data out of one provider’s system — as well as proprietary software licensing and a lack of interoperability standards. The result, according to the CMA, is “reduced choice, higher costs, and slower innovation” across the UK’s digital economy.
In response, the CMA is now considering designating Microsoft and Amazon as companies of Strategic Market Status (SMS) under the UK’s Digital Markets, Competition and Consumers Act (DMCC). If implemented, this would introduce a new layer of regulatory scrutiny, potentially requiring cloud providers to cap egress fees, standardise interfaces, and eliminate preferential licensing for their own cloud environments. SMS designation could also bring mandatory codes of conduct, compliance reporting, and up-front oversight by a newly empowered digital markets unit.
Microsoft and Amazon both dispute the findings. In a joint statement, the companies argued that the UK market remains highly competitive, pointing to rapid price declines, growing multicloud adoption, and the presence of strong European and global challengers. Microsoft also defended its licensing model, noting that discounts reflect “years of security and product integration investment.” Google Cloud, by contrast, welcomed the report, calling it a “watershed moment” for the industry and urging swift action to “level the playing field.”
Industry reaction has been mixed. Major user groups, such as the UK’s Federation of Small Businesses, have backed moves to reduce switching friction and improve pricing transparency, especially for smaller enterprises and the public sector. However, they also caution that over-regulation could add new costs or slow the pace of innovation.
The probe arrives as the UK cloud services market continues to expand at double-digit rates, now valued at over £10 billion annually, with the public sector and SMEs among the fastest-growing customer segments. According to recent research, less than 1 percent of UK cloud customers switch provider in any given year, underscoring the challenge of overcoming technical and contractual lock-in.
Globally, the UK’s action is being closely watched by regulators and policymakers in Brussels, Washington, and Canberra, where similar concerns over hyperscaler dominance have led to parallel investigations and policy proposals. The European Union’s Digital Markets Act, as well as ongoing US Federal Trade Commission probes, could signal converging international approaches in coming years.
The CMA will now launch a public consultation before issuing a final SMS decision, expected in early 2026. If confirmed, new regulatory obligations could reshape procurement, pricing, and innovation across the UK’s enterprise tech landscape — and set a precedent for international markets.
