UK Cloud Market: A Call for Change

The UK's cloud computing market is facing challenges, with Ofcom referring it to the Competition and Markets Authority (CMA) for an in-depth investigation. The market study identified several features that hinder effective competition, including egress fees, technical barriers to interoperability, and committed spend discounts. These factors can discourage customers from switching providers or using multiple cloud services, leading to higher costs, less choice, and lower innovation.

Egress fees, charged by cloud service providers for data transfer out of their infrastructure, can make it more expensive for customers to use multiple providers or switch providers. Technical barriers to interoperability and portability, such as different APIs and services offered by different providers, can also make it difficult and costly for customers to switch providers or use multiple providers simultaneously. Committed spend discounts, while benefiting customers by reducing costs, can create incentives to use a single cloud provider for all or most of their needs, locking customers into long-term contracts.

The CMA's investigation aims to determine whether competition in the cloud services market is working well and, if not, what action should be taken to address any issues found. Potential remedies could include regulating egress fees, promoting interoperability and portability, addressing committed spend discounts, encouraging multi-cloud adoption, strengthening enforcement of competition law, and promoting transparency and information in the market.



The UK cloud computing market has significant growth potential, with public cloud services revenue expected to reach around 12 billion U.S. dollars in 2020, representing almost four percent of the global public cloud market. However, the market's current state may not be effectively serving the needs of UK businesses and organizations. By addressing the identified competition concerns and implementing appropriate remedies, the CMA can help improve the market for cloud services in the UK, promoting competition, innovation, and better outcomes for customers.

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