UK Cloud Shake-Up: CMA Targets AWS & Microsoft Rules
AWS and Microsoft dominate the UK cloud infrastructure sector, with Google Cloud far behind, holding between 5–10% of market share.
In its provisional findings from January 2025, the Competition and Markets Authority (CMA) has highlighted key barriers hampering competition and customer choice in the sector.
- Egress fees: AWS and Microsoft charge substantial fees for transferring data out of their clouds, erecting a costly “cloud lock-in” for customers seeking to switch providers or adopt multi-cloud strategies.
- Licensing restrictions: Microsoft’s complex software licensing terms inflate costs when running its workloads on competitor clouds like AWS or Google Cloud, discouraging multi-cloud adoption.
- Interoperability limits: Lack of standardised APIs and data portability complicates switching and adds operational overhead, further entrenching vendor lock-in.
The CMA signals readiness to impose robust remedies addressing these issues, reflecting global regulatory trends in Europe and Australia.
Expected regulatory remedies and enterprise impact
Capping or banning egress fees
The CMA may require hyperscalers to make data egress either free or strictly cost-reflective. Doing this could dramatically reduce switching costs and encourage workload mobility.
- Enterprises gain freedom to move applications and data between clouds and on-premises without prohibitive penalties.
- Procurement teams will have stronger negotiation leverage, as switching threats become credible.
- Increased cloud-to-cloud traffic will drive demand for cloud on-ramps, interconnection and carrier-neutral data centres.
A Microsoft submission stated: “If the CMA artificially prohibits cloud providers from charging egress fees on private premium networks, cloud computing providers will be faced with difficult choices regarding the care and growth of this essential infrastructure for UK customers.”
Fairer software licensing practices
Microsoft’s licensing comes under scrutiny, with proposals including mandatory bring-your-own-licence parity across clouds, banning support terms tied to Azure usage and necessitating transparent pricing.
- Enterprises would see significant cost savings running Microsoft workloads on alternative clouds.
- Multi-cloud backup and disaster recovery strategies become more viable.
- IT teams gain better clarity for budgeting and contracts, easing multi-cloud adoption.
Strengthening interoperability and portability
Mandating open APIs and standardised data formats would significantly simplify workload migration, reducing technical barriers and vendor lock-in. It would make switching between cloud providers both easier and more cost-effective for enterprises.
Additionally, such measures would enable smaller UK-based and sovereign cloud providers to compete more effectively, particularly in regulated industries like healthcare, where data security and compliance are critical.
Furthermore, the CMA may designate AWS and Microsoft with Strategic Market Status (SMS) under the Digital Markets, Competition and Consumers Act.
The designation would impose ongoing conduct obligations on these hyperscalers along with requirements for enhanced transparency.
Enterprises would benefit from faster dispute resolution processes and more predictable pricing models, while vendors would face stricter reporting and compliance demands that could improve overall customer experience.
Industry voices and vendor responses
AWS and Microsoft have defended their scale-driven value and argued that changes could hamper investment and security.
Microsoft described CMA findings as “vague” and highlighted its competitive investment levels.
Meanwhile, critics warn that egress fee elimination and licensing reform could spark legal challenges and raise questions about implementation complexities.
Global implications and sector opportunities
Though UK-focused, CMA decisions often influence global regulatory approaches, with the European Commission and Australia’s ACCC closely watching. Multinational enterprises operating across regions may experience ripple effects shaping cross-border cloud strategies.
For telecom carriers, data centre operators and interconnection providers, reducing cloud lock-in presents growth prospects.
Increasing cloud mobility will likely boost demand for interconnection services, cloud on-ramps and bandwidth, challenging hyperscaler private backbones with public network alternatives.
Preparing for change: strategic recommendations for enterprises
UK enterprises should take proactive steps to prepare for upcoming changes in the cloud market. They need to carefully review their current cloud contracts, paying particular attention to egress fees and any vulnerabilities in software licensing that could affect costs or flexibility.
Strengthening vendor management capabilities is essential, especially to handle the complexities of multi-cloud and hybrid cloud environments effectively.
Enterprises should also prioritise adopting open standards and architectures that minimise the risks of vendor lock-in, thereby enabling greater portability and interoperability.
Additionally, actively engaging with regulatory consultations will allow organisations to provide valuable input, helping to shape practical and balanced outcomes that reflect real-world business needs.
The CMA’s anticipated 2025 cloud market ruling promises a transformative shake-up, lowering barriers to multi-cloud adoption and fostering market contestability.
While cloud giants face increased oversight, enterprises stand to gain greater control, cost transparency and flexibility. Forward-looking organisations will seize the moment to optimise cloud strategies, connectivity and vendor relationships amid an evolving, more open digital infrastructure ecosystem.
