Ofcom has published the final report of its cloud services market study and referred the matter to the Competition and Markets Authority (CMA) for further investigation.
Some UK businesses have told us they're concerned about it being too difficult to switch or mix and match cloud provider, and it's not clear that competition is working well. So, we're referring the market to the CMA for further scrutiny, to make sure business customers continue to benefit from cloud services. - Fergal Farragher, Ofcom's Director responsible for the Market Study
Ofcom's report sets out concerns in three key areas:
- Egress fees. These are charges that customers pay to transfer data out of a cloud service provider's infrastructure. Ofcom believes that these fees can discourage customers from using services from more than one cloud provider or to switch to an alternative provider.
- Technical barriers to interoperability and portability. Ofcom has identified what it sees as features of the cloud market that result in customers putting additional effort into reconfiguring data and applications so they can be used in multiple cloud environments.
- Committed spend discounts. Ofcom acknowledges these can benefit customers by reducing costs, but believes they are structured in a way that creates incentives to use a single cloud provider for all or most of their needs.
techUK response
Cloud computing has become an essential component of the UK economy, transforming how we live and work, and techUK supports an open and competitive market that facilitates customer switching and the use of multiple providers.
One of the core strengths of cloud computing is the flexibility it offers to customers that enables more agile business practices. This has had a transformational impact on the market for compute, data storage and networking, and been a catalyst for innovation and economic growth.
It is vital that any regulatory intervention strikes an appropriate balance between reinforcing competition, supporting multi-cloud and customer switching, and ensuring the UK continues to benefit from ongoing investment in the cloud infrastructure and computing power that will be needed for the UK to make the most of emerging technologies like AI and quantum computing.
techUK encourages all members to participate in the CMA consultation once it is published and we will be hosting a series of industry roundtables to facilitate discussion of Ofcom's conclusions and the CMA's proposed focus for its investigation.
Next Steps
The CMA will now conduct an independent investigation to decide whether there is an adverse effect on competition. More details can be found here: CMA cloud services market investigation.
The deadline for the CMA's final report is 4 April 2025.
techUK will continue to engage with our members and the CMA in the coming months and we encourage all members with views on Ofcom's conclusions to contact chris.hazell@techuk.org