Mike Hoy, CTO, Pulsant

The Competition and Markets Authority (CMA) has published its long-anticipated investigation into the cloud services market which marks an important moment in the ongoing development of the UK’s digital infrastructure.

For those unfamiliar with the findings, the report sought to determine whether certain features of the UK cloud sector were limiting competition, amid concerns that a lack of market dynamism was leading to inflated costs and diminished service quality.

The results were striking. AWS and Microsoft hold substantial market dominance, which could be restricting competition. Businesses also face technical and financial barriers when attempting to transfer data between cloud providers, making it challenging to switch or operate across multiple platforms. Furthermore, Microsoft’s software licensing policies may disadvantage customers seeking alternative cloud options, raising concerns about market fairness.

Adapting to the changing cloud landscape

The pandemic-driven acceleration towards cloud adoption left many organisations with little time to strategically shape their digital infrastructure. Hyperscalers became the go-to solution. However, businesses today demand far more than just a place to store data. Operational efficiency, regulatory compliance, and data sovereignty are all critical factors shaping their cloud strategies. To support businesses in achieving their full potential, the UK must foster a market that reduces costs while offering diverse and bespoke cloud solutions.

Cloud demands have evolved: Our approach must too

As the cloud market continues to mature, ensuring competition, affordability, and innovation remains imperative. Achieving this requires an ecosystem that:

  • Promotes an open cloud framework – Organisations should have greater control over where their data is stored, fostering UK-based service providers with a strong understanding of local regulations.
  • Caters to diverse infrastructure needs – Businesses should be able to deploy workloads where they are most effective—latency-sensitive applications in edge environments or local data centres, and high-compute workloads in global public clouds.
  • Encourages competition while driving innovation – A balanced market will provide businesses with cost-efficient, tailored solutions rather than restrictive, one-size-fits-all offerings.
  • Ensures data sovereignty – By investing in sovereign cloud infrastructure, the UK can protect business and public sector data, support digital innovation, and build a more competitive domestic cloud ecosystem.

What comes next?

The CMA is now considering leveraging its new digital markets powers to tackle these concerns. This could involve assigning AWS and Microsoft “strategic market status,” which would introduce stricter regulatory measures. A final decision is expected by April 2025. However, any interventions must strike a careful balance—preventing anti-competitive practices without stifling innovation or limiting business choice.

A regulatory framework that fosters a wider variety of cloud solutions will empower UK businesses to select services best suited to their needs. Supporting the expansion of UK-based cloud providers while maintaining access to global services when necessary is key. The focus should be on implementing clear data governance rules while ensuring organisations have flexibility in how they meet compliance requirements.

A dynamic and competitive cloud market is essential to unlocking the full potential of UK businesses. By broadening choice, reducing costs, and encouraging innovation, we can create a more resilient digital infrastructure that delivers real benefits to British businesses.

Source

Pulsant