
An independent inquiry for the Competitions and Markets Authority (CMA) has published findings of an investigation into the £9 billion cloud services market.
The assessment has found that competition is not working as well as it could be, with UK businesses facing higher costs, less choice, less innovation and a lower quality of service as a result.
Cloud services provide vital infrastructure which supports improved innovation, productivity and scaling for most businesses and organisations in the UK. Customers include financial services, retailers, digital start-ups and key public services who spent £9 billion on cloud services in 2023, a figure growing by over 30% each year.
The inquiry group provisionally found that the cloud services market was dominated by two providers, Microsoft and Amazon Web Services (AWS), that each have an approximately 40% market share. The third largest provider, Google, has a much smaller share, and high barriers to entry made it difficult for new cloud service providers to enter the sector.
The report also highlighted technical and commercial barriers that made it challenging for cloud customers to switch to new providers. It also found Microsoft was able to leverage its strong position in the software market to make it harder for AWS and Google to compete for customers using its software.
In response to the findings, the CMA has been recommended to use its powers under the Digital Markets, Competition and Consumers Act 2024 to consider whether to designate the two largest providers, AWS and Microsoft, with strategic market status in relation to their respective digital activities in cloud services. A similar investigation as to whether Google should have this status in the search advertising market is also underway.
Kip Meek, chair of the CMA’s independent inquiry group, said:
“Cloud services underpin most business operations, providing vital infrastructure to businesses and organisations across the UK economy. Our provisional view is that competition in this market is not working as well as it could be. So, we propose that the CMA considers investigating the largest cloud service providers using its new digital markets powers.
“Effective competition in the delivery of these vital services could drive choice, quality and competitive prices – not only helping UK businesses but boosting innovation, productivity, growth and investment across the UK economy.“
The inquiry group will consult on its provisional findings and recommendations before making a final decision by the statutory deadline of 4th August 2025.