Source URL: https://www.theregister.com/2025/03/06/cma_overlooks_factors_hurting_small/
Source: The Register
Title: Watchdog fails to stop big vendor lock-in, say UK cloud market’s smaller players
Feedly Summary: Global giants shouldn’t be allowed to make ‘committed spend’ public sector deals and make discounts we cannot match
Britain’s competition regulator is facing biting criticism from local cloud providers for declining to act on Committed Spend Agreements (CSAs), the sales tools that AWS and Microsoft use to lure customers.…
AI Summary and Description: Yes
Summary: The UK’s Competition and Markets Authority (CMA) has faced criticism for its investigation into Committed Spend Agreements (CSAs) from local cloud providers who argue these agreements facilitate a monopoly for AWS and Microsoft. Although the CMA acknowledged that CSAs influence customer choices, it concluded they do not harm competition. Smaller cloud providers warn that these practices limit market access and ultimately harm competition and innovation in both the cloud and AI markets.
Detailed Description:
– The Competition and Markets Authority (CMA) declined to take further action on Committed Spend Agreements (CSAs) despite feedback from smaller cloud providers. This decision has drawn significant criticism and raises concerns regarding competition in the UK cloud market.
– Key Findings:
– CSAs are contracts between cloud providers and customers guaranteeing a minimum spend in exchange for discounts.
– The CMA’s preliminary findings suggest that while CSAs are widespread and influence customer choices, they do not harm competition since rival providers can still compete effectively.
– The CMA did note that issues like technical barriers, egress fees, and Microsoft’s licensing practices contribute to market inefficiencies.
– The CMA is considering designating AWS and Microsoft as having “strategic market status,” which could lead to specific remedies regarding their practices.
– Criticism from Smaller Cloud Providers:
– Industry insiders argue that CSAs and associated discounts (CSDs) allow big tech companies to dominate the market, limiting opportunities for smaller providers.
– Former UKCloud CEO Simon Hansford stated that CSAs foreclose market verticals, especially in the public sector.
– Other cloud operators report significant financial losses due to customers being attracted to larger providers through these contracts.
– Concerns of conflict of interest arise as the CMA itself contracts with AWS, reportedly increasing its spend on AWS’s services.
– Arguments Against the CMA’s Findings:
– The CMA’s conclusions have been met with skepticism, especially concerning the long-term impact of CSAs and CSDs on market dynamics.
– Smaller providers like Civo and OVHcloud are advocating for a re-evaluation, arguing that these discount schemes serve to reinforce the dominance of hyperscalers, constraining competition.
– Contrasting Perspectives:
– Some organizations, like the Startup Coalition, advocate for the continuation of CSAs, citing their importance in enabling early-stage startups to access cloud services at lower costs.
– Response from Major Cloud Providers:
– AWS, Microsoft, and Google publicly supported the CMA’s preliminary findings, arguing that these agreements foster competition and customer switching, which ultimately benefits the market.
– Next Steps:
– The CMA is consulting on its findings and will accept further evidence before making a final decision aimed at ensuring a healthier cloud sector in the UK.
Overall, this situation underscores significant implications for competition policy and market access, particularly for smaller players in both cloud computing and AI security, raising important questions about regulatory oversight and the balance of power within the industry.