France, the Netherlands and the UK have all announced reviews of competition in the cloud market, but will their investigations identify concerns?
Ofcom to formally assess cloud market dynamics in the UK: As part of a new work programme focused on digital markets, Ofcom is to launch a market study into the UK’s £15bn cloud services sector. Cloud computing is dominated by just three ‘hyperscalers’: Amazon Web Services (AWS); Google; and Microsoft. Over the next 12 months, Ofcom will examine the strength of competition in cloud services today and how it might evolve, and consider any market features that might limit innovation and growth in this sector, or present barriers to entry. Should Ofcom find that the market is not working well, it could respond through: recommendations to the Government to change regulations or policy; competition or consumer enforcement action; a market investigation reference to the CMA; or undertakings in lieu of making a market investigation reference.
France’s competition authority has made digital markets a priority: In January 2022, the Autorité de la concurrence announced an in-depth review of the competitive situation in the cloud sector. This began with an initial assessment, which involved over 30 informal interviews with market players and organisations such as France’s cybersecurity agency and data protection authority. With the cloud computing industry comprising various different firms subject to multiple regulations (including the three previously mentioned hyperscalers), the enquiry is looking at the existence of competitive constraints between types of cloud services – but will stop short of attempting to define relevant markets. It is also considering whether the technical or business practices, or the vertical integration of certain cloud firms could “restrict the development of competition on the merits”. The authority launched a public consultation to gather stakeholder views, which ran from 13 July to 19 September, and is now reviewing responses.
Dutch regulator seeks to promote competition between cloud providers: In September 2022, the Authority for Consumers and Markets (ACM) released a study that identified a number of concerns with the functioning of the Dutch cloud market. While businesses in the Netherlands are among the leaders in cloud usage in Europe, the regulator finds that it is hard for users to switch cloud providers or to combine the services of different providers. Consequently, it sees risks for price, quality and innovation in the sector. The ACM is particularly concerned by the prospect of further consolidation in an already concentrated market, where AWS and Microsoft each hold a 35-40% share. The regulator considers that the EU’s Data Act is currently insufficient to deliver a viable cloud services market in the bloc and has therefore proposed amendments to drive interoperability between providers.
A coordinated probe by data protection agencies into public sector use of cloud: In February 2022, the European Data Protection Board (EDPB) began its first coordinated enforcement action to examine the use of cloud services by public bodies across the region. The EDPB is looking to foster best practice and identify challenges with GDPR compliance, and will issue a report by the end of the year. In June 2022, Denmark’s Datatilsynet started investigating two public bodies over the legality of personal data transfers to third countries, also signalling a forthcoming investigation into private firms’ use of cloud. As the private and public sectors leverage cloud for digitisation efforts, hyperscalers will remain a major focus of many data protection authorities across the EU. Though it is not guaranteed that the investigations announced by European regulators will identify specific competition concerns, they nonetheless form part of a wider agenda to address the power and influence of big tech.
Source: https://www.ofcom.org.uk/news-centre/2022/ofcom-to-probe-cloud,-messenger-and-smart-device-markets
