Amazon Web Services (AWS) and Microsoft's dominance in the cloud computing market is set to come under new scrutiny as the European Commission (EC) moves to investigate the pair under the provisions of the Digital Markets Act (DMA).
The EC has launched two separate investigations into AWS and Microsoft, the purpose of which is determine whether suppliers should be included in the scope DMAs were designated as “gatekeepers” in recognition of how much control they had in the cloud computing market.
Under the terms of the DMA, gatekeepers are typically large technology companies that can control access to digital services markets and, in turn, make it difficult for smaller companies to gain a foothold in them.
They must also meet a certain set of market value, revenue and user numbers to qualify as gatekeepers, and are expected to comply with rules set by the EU to encourage competition to flourish in the parts of the digital services market in which they operate.
Failure to comply with these rules may result in the commission imposing a fine of up to 10% of a company's annual income for a first violation, increasing to 20% for a second violation.
In its statement, the EC said it decided to continue its investigation into AWS and Microsoft, despite the fact that neither of them meets the DMA thresholds for size, number of users and market position.
The investigation will last up to 12 months, the EC confirmed, with a final report on the findings to be published within 18 months.
“If the Commission finds that Microsoft and Amazon meet the criteria for appointment as controllers of their cloud computing services under the DMA, Amazon and Microsoft will have six months to ensure that their designated cloud computing services fully comply with the obligations of the DMA,” the EC said in a statement.
Computer Weekly has contacted representatives from AWS and Microsoft for a response to the European Commission's plans, with both firms providing statements saying they are confident the investigation will prove that neither has a single case to answer.
In a statement to Computer Weekly, an AWS spokesperson warned that any attempt to label members of the cloud computing community as “gatekeepers” could serve to stifle competition in the European technology market.
“We are confident that when the European Commission looks at the facts, it will recognize what we all see: the cloud computing sector is extremely dynamic, companies enjoy greater choice, unprecedented innovation opportunities and low costs, and that appointing cloud service providers as gatekeepers is not worth the risks of stifling invention or increasing costs for European companies.”
Meanwhile, a Microsoft spokesperson told Computer Weekly that the company is willing to participate in the investigation. “The cloud sector in Europe is innovative, highly competitive and accelerates the growth of the entire economy. We are ready to contribute to the European Commission's market research,” they said.
Despite this, Teresa Ribera, executive vice-president of the EU's Clean, Fair and Competitive Transition initiative, said cloud computing services are “vital for Europe's competitiveness and sustainability” but the market for them must be built on “fair, open and competitive terms.”
She continued: “That's why today we are launching an investigation into whether Amazon and Microsoft's leading cloud computing services, Amazon Web Services and Microsoft Azure, should be subject to the Digital Markets Act.”
She also confirmed that the EC will launch a third related investigation to examine whether the DMA is an effective tool to address anti-competition and fairness concerns in the European Union (EU) cloud computing sector.
This will depend on whether existing DMA rules should be updated so Europe can “keep pace with rapidly evolving practices” in the EU cloud market, she said.
The Commission confirmed that the investigation will include obtaining information from “relevant market players” to assess the effectiveness of the DMA in addressing issues such as barriers to interoperability between competing cloud services and incompatible contract terms.
Nicky Stewart, senior adviser at cloud market competition advocacy group Open Cloud Coalition, welcomed the commission's decision to look into the inner workings of the European cloud market before sharing details of the specific areas the investigation should cover.
On this point, she highlighted Microsoft's controversial stance of charging customers higher fees to use its software in competing cloud environments. which has already seen it come under regulatory scrutiny elsewhere in the world..
“These investigations are a good start for cloud customers. To achieve Europe's sovereign ambitions, Microsoft's anti-competitive approach to cloud licensing must be treated as a priority,” she said.
“We also need to remove barriers to data portability and interoperability. These practices promote silos, undermine digital resilience, and exclude competition. The commission's efforts must address these issues if we are to create a thriving and competitive cloud market.”
News of the European Commission's investigation into AWS and Microsoft comes on the heels of a finding from the UK Competition and Markets Authority (CMA). antitrust probe into two firms as part of a wider investigation into the inner workings of the UK market for cloud infrastructure services..
