Cloud providers, including Microsoft, Google, and Amazon Web Services (AWS), have submitted responses to the UK Competition and Markets Authority's (CMA) provisional findings from its cloud services market investigation.
The initial report from the CMA was released in late January 2025 and found that both Microsoft and AWS had been "generating sustained returns from their cloud services substantially above their cost of capital in cloud services for a number of years."
The report identified issues with egress fees reducing the ability for customers to switch or use multi-cloud solutions, economies of scale preventing smaller providers from entering the market or expanding, and dedicated a section to Microsoft's licensing of products.
Specific to the software licensing issue, the CMA found differences in relation to pricing and quality factors when customers used the software products on Microsoft cloud versus that of AWS and Google - "in fact, the price that Microsoft charges these rivals for some of these products can be higher than the retail price it charges its own customers."
Both AWS and Microsoft were recommended for "SMS investigation" under the Digital Markets, Competition, and Consumers Act, which came into force at the start of this year, to consider designating the companies as having "strategic market status." Should AWS and Microsoft be found to be "SMS," they could be subjected to further investigation, and face conduct requirements, and reporting requirements.
Microsoft has now hit back at the CMA, submitting a response on February 28, arguing that the regulatory body has not based its findings on "evidence" but instead using "hypothetical scenarios" and is "singling out" Microsoft.
Microsoft added: "While AWS clearly believes it is entitled to license all of Microsoft’s software for its own benefit and on favorable terms (even though AWS provides none of its own software to Microsoft or anyone else), it has not, to our knowledge, complained about an inability to compete effectively. Nor could it."
The response further draws attention to Google Cloud's successful growth, arguing that "with results like that, it bears reflecting whether the CMA must intervene to enable Google’s growth in the UK market by softening competition from its competitors."
Microsoft described the request from AWS and Google to constrain the price that Microsoft can charge them when they use Microsoft's software to build and sell cloud services to their customers, and the price Microsoft itself charges customers, as "extraordinary and unprecedented," adding "no other software provider in the industry would be subject to similar limitations," and that AWS and Google do not allow any of their services to be licensed to Microsoft or other competitors at any price.
The company also criticized Google's previous move to offer CISPE close to $500 million to continue its antitrust probe against Microsoft, and reiterated its accusation that the launch of the Open Cloud Coalition was a direct attempt to campaign against Microsoft.
Microsoft concludes that starting a third investigation on the part of the CMA would be "a step in the wrong direction," and instead recommends the monitoring of developments and outcomes for UK customers in the cloud computing market.
AWS' response to the provisional findings similarly asserts that the CMA's findings that AWS is anticompetitive are incorrect and claims that the CMA does not provide evidence for that. AWS does, however, agree that "Microsoft’s deliberate commercial decisions with respect to its software licenses is an example of such an artificial barrier, designed to restrict interoperability."
Google, as expected, "strongly agree[s] with the CMA’s finding that Microsoft’s software licensing practices are giving rise to an adverse effect on competition," and said that it "broadly support[s] the package of remedies that the CMA recommends," though disagrees with proposed remedies on egress fees.
Other responders to the report include the Open Cloud Coalition, Black Box Hosting, CCIA, Civo, Cloudflare, International Centre for Law and Economics, OVHcloud, Prolinx, Rayo, Rob Sedgwick, Simon Hansford, and Startup Coalition.
Following the submission of these responses, the CMA is now determining whether to take action against the barriers to competition it has identified, with a final decision due later this year.
