CMA nears conclusion of its UK market investigation into cloud service

Following on from its referral from Ofcom, the CMA has since been progressing through its market investigation into the supply of public cloud infrastructure services in the UK and, following the publication of its provisional findings earlier this year, is now in the so-called “Phase 2” of this process. This means that the CMA has been and will be providing firms the opportunities to comment on its investigation thus far. This window for comment will close in April, and the CMA is hoping to publish its final decision at some point in July 2025. In any case, this final decision must be given no later than on the 4 August 2025, which is the statutory deadline for this process.

The CMA published its provisional decision on its market investigation on 28 January 2025, in both summary and full-length format. In brief, the CMA provisionally concluded that it had identified certain adverse effects on competition (AEC(s)) within the cloud computing market, and subsequently proposed a series of remedies in order to mitigate or prevent these AECs. These provisional recommendations included making recommendations to the CMA Board to designate, under the new powers granted to it under the Digital Markets, Competition and Consumers Act 2024 (DMCCA), the two largest service providers within the market (AWS and Microsoft) as having Strategic Market Status (SMS). Under these new powers, this designation would enable the CMA to construct one or more bespoke conduct requirements for each service provider with SMS, or to launch bespoke pro-competition interventions where they felt necessary. Furthermore, the new powers under the Act provide the CMA with the power to fine a designated service provider with SMS up to 10% of global revenue, when it is in breach of the relevant requirements.

Following the publication of its provisional decision, the CMA offered firms the opportunity to provide any comments and feedback. The CMA received 16 responses, from not only the large players within the field (i.e., Microsoft, AWS, Google, Cloudflare), but also other smaller companies, industry bodies, and experts in the field. Perhaps unsurprisingly, Microsoft and AWS provided two of the most lengthy responses (at 75 and 30 pages respectively), as they sought to outline why they did not feel that the cloud computing market was anti-competitive (and, by inference, why there would therefore be no need to consequently designate anyone as a service provider with SMS). Broadly speaking, their responses sought to establish that the CMA had come to the wrong conclusions, by basing its findings on a misinterpretation of the current market, or by overly relying on hypothetical or theoretical scenarios. Otherwise, it is interesting to note that most of the other responses were generally supportive of the package measures proposed by the CMA – which again, if unsurprising, at least shows how polarising the matters considered in the market review and the suitability of the current state of the market has become amongst market players.

The CMA will take this feedback on board, and has provided a further deadline of April 2025 for firms to provide their feedback on the investigation process as a whole. Any further commentary will feed into the finalised decision, which is anticipated to be published in July 2025. It will be interesting to track how this continues to develop, and to consider by comparison the weight that the CMA places on the feedback that these larger players have provided in the interim.