Tech giants under the spotlight as Ofcom kickstarts cloud probe

The British communications regulator is investigating tech giants Amazon, Microsoft and Google regarding their position within the UK’s £15 billion cloud services market.

Together, the three ‘hyperscalers’ generate about 81 percent of revenues in the UK’s public cloud infrastructure services market, and Ofcom said Thursday it plans to examine whether the market is ‘working well’ for the country’s consumers and businesses.

The regulator announced that it will launch a market study into the sector in the coming weeks, which will assess the competitive strength, the position of the hyperscalers in the market and factors that could hinder innovation and growth.

Cloud offerings can cover a range of different services and products

While Ofcom also plans to look at other digital service providers, such as WhatsApp and Zoom, it warned that if competition concerns are identified during the investigation, “it could lead to further action.”

The “cloud” refers to servers that can be accessed remotely over the Internet. When you store or access something in the cloud, it means it is stored on these remote servers rather than directly on your computer’s hard drive.

“Cloud services” simply refers to the services delivered to businesses and customers over the Internet that are designed to provide easy and inexpensive access to applications or resources without the need for an internal infrastructure.

The need for these services has grown enormously in recent years.

According to figures from Ofcom, global enterprise IT spending has increased from 10 percent in 2018 to 17 percent in 2021, mainly due to the need for remote working. Some analysts believe this figure could reach 45 percent by 2026.

Ofcom, which is working closely with the competition watchdog on the investigation, is pushing for opinions on the market and plans to publish its findings within 12 months.

The findings will report any concerns or proposed recommendations, including enforcement action or making policy recommendations to government.

Ofcom said: “Cloud computing is a huge and fast-growing market, which uses remote servers to provide services such as software, storage and computing power.

‘The user, which can be a person or a company, does use these services, but does not manage them directly.

“The cloud has become an essential part of how products are delivered to telecom users, as well as viewers and listeners of TV, radio and audio content.

‘If we find that a market is not working properly, this can have negative consequences for companies and ultimately consumers, through higher prices, lower service quality and reduced innovation.’

The ‘hyperscalers’ have continued to increase their market share