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The U.K.’s communications regulator recommended an in-depth probe into the country’s cloud market, as hyperscalers Amazon (NASDAQ:AMZN) and Microsoft (NASDAQ:MSFT) have cornered the lion’s share of the market, thereby limiting competition.
Amazon Web Services and Microsoft (MSFT) have a combined market share of 60%-70% in the U.K., followed by Google (GOOG) (GOOGL), which has 5%-10% market share.
“High levels of profitability for AWS, and substantial consistent growth in Microsoft’s profits, indicate there are limits to overall competition,” said the Office of Communications (Ofcom). “We are concerned that constraints on customers’ ability to use more than one provider could make it harder for smaller cloud providers to win business and compete with the market leaders.”
The regulator cited egress fees, restrictions on interoperability and committed spend discounts as barriers to competition. Ofcom called on the Competition and Markets Authority to further investigate the nature and extent of these barriers.
“We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services,” said Fergal Farragher, Ofcom’s director responsible for the market study.
Earlier, Evercore believes there is significant long-term upside for Amazon (AMZN) despite near-term AWS headwinds.
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