The cloud computing industry has come under increased scrutiny in the past few months. From the EU considering complaints of Europe-based cloud computing services to UK’s Ofcom, regulators are taking a deep look at the competition in the cloud service market, or rather the lack of it and why.
On September 22, the UK’s media regulator announced that it will probe the dominance of tech giants Amazon, Google, and Microsoft in the cloud services market. The main intention of the cloud computing probe is to determine whether there are any competitive concerns and if yes, how to address them.
What is cloud computing used for?
Cloud computing is mainly used for file sharing, file storage, and data backups. In short, cloud computing services deliver computing services like servers, storage, databases, networking, software, and analytics over the Internet helping increase efficiency and reduce operational costs. It is called cloud computing as services are accessed from a cloud or virtual space.
Cloud storage means that you only pay for the services you use, thereby eliminating the need to acquire additional hardware and operational teams. The cloud services market has been instrumental in taking the load away from the machines we carry around, as all the heavy-lifting – processing enormous amounts of data – is done in cyberspace, by clusters of computers stored far away.
The three main types of cloud computing services are: software-as-a-service (SaaS), infrastructure-as-a-service (IaaS), and platform-as-a-service (PaaS).
Why is the UK probing Amazon, Google, and Microsoft?
The cloud services market is largely dominated by big tech players Amazon, Google, and Microsoft. A study by the Synergy Research Group found that these three make up 65% of the global market share.
Selina Chadha, Ofcom’s director of connectivity, said the regulator had not yet reached a view on whether the cloud giants are engaged in anticompetitive behavior. The agency will study the strength of competition in the cloud services market to understand its effect on innovation and growth.
Amazon Web Services, the cloud division of Amazon, raked in nothing less than $62.2 billion in revenue in 2021. Microsoft cloud services is the second biggest player, followed closely behind by Google. According to Ofcom, these three hyperscalers generate nearly 81% of revenue from the cloud computing market.
The cloud computing probe will study the cloud computing services provided by the big firms and publish a report within 12 months. In case of any concerns, it will also propose a list of recommendations. The British regulator also has plans to study the role and reach of virtual assistants like Amazon’s Alexa and Google Home in the next year.
“The way we live, work, play and do business has been transformed by digital services,” Chadha said in a statement Thursday. “But as the number of platforms, devices and networks that serve up content continues to grow, so do the technological and economic issues confronting regulators.”
“That’s why we’re kick-starting a program of work to scrutinize these digital markets, identify any competition concerns and make sure they’re working well for people and businesses who rely on them,” added Chadha.
The agency reiterated that its job is “to ensure that communications markets are working well for consumers and businesses, ” and wants to promote competition for the benefit of customers.
The move is part of regulators across the world stepping in to prevent large tech companies from monopolizing the market and stifling competition. Recently, Microsoft cloud services amended its cloud computing license to accommodate competitors’ tools on its platforms, as a preventive measure to avoid a regulatory probe by the European Union.
The EU has repeatedly fined Google, Apple, Amazon, and Meta for digital offenses and refined laws to prevent antitrust offenses.
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