Months after deciding AWS and Microsoft do have unhealthy market dominance, the UK competition regulator decides the best course of action is...do nothing. WTF?!?

Well, that was three years of investigation that resulted in...well, beggar all really!

Amazon Web Services and Microsoft Azure have escaped being branded as having excessive dominant hold over the UK cloud market after the country’s Competition and Markets Authority (CMA) concluded its high-profile three year inquiry into the two.

The CMA concluded that neither of the US cloud services giants falls into the camp of being regarded as having Strategic Market Status (SMS). This is despite that fact that last year the CMA deemed in its preliminary findings that the dominance of Amazon and Microsoft was harming competition, with the latter particularly singled out for its licensing practices.

If the CMA had come to the opposite decision, it could then have imposed obligations on how they operate in the UK, including conduct requirements, and staged pro-competition interventions to ensure an ongoing level playing field.

Instead the CMA congratulated itself on having somehow pushed the providers into modifying their behavior all by themselves:

According to CMA chief executive Sarah Cardell, the regulator is simply acting in a "flexible, pragmatic way to deliver real impact, as quickly as possible for UK customers”, insisting:

This announcement shows we’re not just responding to today’s concerns but getting ahead of emerging issues too. Cloud remains central to our approach – we’ve seen real progress through our engagement with Microsoft and Amazon to drive meaningful improvements on egress fees and interoperability and we expect more action from them over the coming months.

Improvements? 

What do these ‘improvements’ look like? Microsoft announced changes agreed with the CMA  that focus on charges for moving data, switching, and interoperability. Microsoft Vice-Chairman and President Brad Smith said:

The changes address the CMA's commitment to ensuring that UK customers can continue to move, deploy, and operate their workloads in the clouds of their choice with confidence, flexibility, and ever reduced friction...In conjunction with the CMA’s extensive review, today’s changes will apply to UK customers using Microsoft Azure. The changes address the CMA’s commitment to ensuring that UK customers can continue to move, deploy, and operate their workloads in the clouds of their choice with confidence, flexibility, and ever-reduced friction.

And the firm moved to ensure that it keeps on the CMA’s good side by adding:

We are committed to working quickly and constructively to address these issues, including by providing all the information the CMA needs to move forward with its reviews. The cloud and AI markets continue to change at an unprecedented pace. The cloud market itself remains intensely competitive, with large investments by Amazon, Google, Oracle, and new neo-cloud entrants and, ironically, with Google, a complainant in this review, growing faster in the last quarter of 2025 than Amazon or Microsoft.

Especially in times of such dynamic change, a thorough regulatory review requires rapid access to real-world market data and customer input. This is the only way regulators can act in a targeted and agile manner that brings faster changes to the market while fostering continued innovation and investment. This type of work always requires dialogue on both sides. We appreciate the opportunity we have had for direct and constructive conversations with the CMA and its staff and look forward to an ongoing dialogue in relation to relevant cloud issues in the future.

Such blandishments are probably a good idea given that the only time the CMA bared its teeth at the end of the current inquiry was when it confirmed that it would continue to examine Microsoft practices - although not Amazon’s - with Cardell stating:

At the same time, we’re taking action now, deciding to launch an investigation into Microsoft’s business software ecosystem. An SMS designation would enable us to tackle remaining concerns around Microsoft’s licensing practices in cloud and would also enable us to ensure a level playing field as AI is rapidly embedded into everyday business software tools.

Hmmm - we shall see.

Meanwhile Amazon announced a new UK Addendum that formalizes its commitment to customer choice through comprehensive rights around multi-cloud adoption, data portability, and switching processes, arguing:

Through ongoing engagement with the CMA and UK customers, we’ll continue to deliver the tools, services, and flexibility that UK businesses are using to thrive.

They did what? 

Reaction to the CMA decision has been predictably mixed. Ryan Triplette, executive director of the Coalition for Fair Software Licensing, approved of the concessions from Microsoft:

Microsoft’s restrictive software licensing practices have been inflicting real harm on UK businesses for years. Even as the CMA was reviewing the Final Decision, Microsoft continued rolling out price increases, policy changes, and suite announcements that hit the bottom lines of customers. The CMA’s decision is among one of the most significant structural interventions to date, and provides real opportunity for UK businesses and the public sector organizations that have absorbed Microsoft’s price increases, navigated its policy changes, and watched their bottom line shrink while their options narrowed.

But for the Open Cloud Coalition, Senior Advisor Nicky Stewart called for the regulator to get tougher:

We welcome this further recognition from the CMA that unfair software licensing practices have broken the cloud market. The SMS investigation into Microsoft’s business software ecosystem must proceed without delay. We also urge the CMA to take swift action should Microsoft and AWS fail to meet their commitments on egress fees and interoperability, and to ensure those commitments are meaningful. Slow progress on these issues continues to hamper growth, innovation and resilience in the UK cloud marketplace. Decisive action will set a benchmark for competition authorities across Europe and beyond.

As to why only Microsoft’s potential SMS status will be further examined,  Mark Boost, CEO of UK sovereign cloud provider Civo, argued:  

The decision made by CMA to investigate Microsoft is encouraging, but the decision to exclude AWS raises practical concerns with both providers being structured in the same way from a structural lock-in perspective, which could create a regulatory imbalance between the two parties that would keep one side unchallenged...If the CMA is serious about delivering on this, it will need to adopt an integrated approach as opposed to only partially regulating these hyperscalers. If the same standards are not applied to both parties, the UK will jeopardise its objectives related to digital sovereignty and economic stability.

He also called for more teeth on show from the CMA:

Voluntary arrangements made with parties outside of the SMS framework will not provide real impact, and by delaying its final decision regarding Microsoft and excluding AWS altogether, there is a risk for CMA to unnecessarily prolong uncertainty and miss an opportunity to future-proof the UK’s digital infrastructure. The current announcement does not provide adequate solutions to solve the serious issues surrounding the dominance of these key foreign-based hyperscalers. There needs to be a fair digital market in which domestic innovation is encouraged, alongside continuing to help build opportunities for international collaboration and trade.

My take

I’m just going to quote Simon Hansford, a veteran of Britain’s cloud market, a man who’s been warning about the dangers of US provider dominance in the UK public sector for a long time: His reaction to the CMA decision:

It feels like a ‘Get Out of Jail Free’ card for the hyperscalers. The decision to only target Microsoft for an SMS investigation while letting AWS skate by with "voluntary commitments" is a massive oversight.

He’s not wrong, you know.

What is the point of faffing around for three years on a toothless inquiry only to come out at the end of it on the one hand saying that there is US dominance in play, and on the other hand deciding to do nothing about it? What a waste of everybody’s time and money.