The £15bn UK cloud computing market is under scrutiny by regulators over concerns that just three US companies dominate more than 80 percent of the industry.
Ofcom examines the dominance of US tech giants Amazon, Microsoft and Google as part of a broader study of digital communications markets.
The regulator, which is gearing up to regulate the wider internet as part of plans under the Online Safety Bill, will launch a market study in the coming weeks that will examine the strength of competition in cloud services and barriers to new entrants to the market. the sector.
The three major providers – Amazon Web Services (AWS), Microsoft and Google – together earn about 81 percent of revenues in the UK public cloud infrastructure services market, according to Ofcom.
The regulator, together with the Competition and Market Authority, is launching a “market investigation” under the Companies Act 2002.
Ofcom said: “We have worked closely with the CMA in planning the market study, and will continue to do so over the course of the project.
“Ofcom will lead the market study, leveraging our strong expertise in communications markets and reflecting that cloud is increasingly becoming an important part of the Internet’s infrastructure.”
Selina Chadha, Director of Connectivity at Ofcom, added: “The way we live, work, play and do business has been transformed by digital services.
“That’s why we’re launching a work program to take a closer look at these digital markets, identify any competition concerns and make sure they work well for people and businesses that rely on them.”
Ofcom will also launch broader research into other digital markets in the coming year, including services such as WhatsApp, FaceTime and Zoom, as well as research into smart speakers and connected televisions.
Professor Diane Coyle, of the University of Cambridge, suggested in May that UK regulators “should pay more attention to how companies have used the internet and cloud computing to radically lower the cost of delivering products and services to each user – possibly up to the point of excluding new entrants from the market.”
The former Competition Committee member said the economies of scale of the largest digital services companies could make it difficult for new entrants to “overthrow the incumbents”, potentially reducing market competition and driving up prices.