The UK’s Competition and Markets Authority (CMA) has concluded that Amazon and Microsoft’s dominance in the country’s cloud computing sector is having a negative impact on competition, potentially leading to higher prices and reduced choice for businesses.

Following a 21-month investigation, the CMA’s independent inquiry group found that Microsoft and Amazon Web Services (AWS) jointly command as much as 70 per cent of UK customer spend in the cloud market. The panel highlighted concerns over technical and commercial barriers to switching providers, as well as Microsoft’s software licensing practices, which were said to “adversely impact the competitiveness of AWS and Google in the supply of cloud services”

The CMA recommended that both Microsoft and AWS be considered for “strategic market status” (SMS) under new digital regulations. This status would give the regulator power to impose targeted interventions, including requirements around pricing, licensing, and service interoperability. However, the CMA board is not expected to begin SMS investigations for these firms until 2026, as it prioritises current reviews involving Google and Apple

The report noted that “Microsoft’s licensing practices are adversely impacting the competitiveness of AWS and Google in the supply of cloud services, particularly in competing for customers that purchase cloud services which use the relevant Microsoft software as an input”. The CMA also warned that the lack of competition in the £10.5 billion sector could be stifling innovation and quality for UK businesses.

Microsoft rejected the findings, stating, “The CMA panel’s most recent publication misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment and rapid, AI-driven changes”. A spokesperson for AWS added, “The action proposed by the inquiry group is unwarranted and undermines the substantial investment and innovation that have already benefited hundreds of thousands of UK businesses”

Google, the third largest provider, welcomed the CMA’s findings, describing the conclusions on restrictive licensing as a “watershed moment for the UK”.

The CMA’s final decision is expected to shape the regulatory landscape for cloud computing in the UK, with the authority emphasising the importance of a level playing field as the sector continues to grow rapidly.

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