Earlier this year, the Competition & Markets Authority (CMA) concluded their 14-month preliminary investigation into the UK cloud services marketplace. Five months later, they published their verdict:
"The market investigation has recommended that the CMA use its digital markets powers to prioritise commencing strategic market status (SMS) investigations, to consider designating the 2 largest providers – Microsoft and Amazon Web Services (AWS) – with SMS in relation to their respective digital activities in cloud services."
So, what does this mean exactly?
Between October 2023 and December 2024, a preliminary CMA investigation found that two hyperscale providers - AWS and Microsoft Azure - controlled 80% of the UK cloud services market, which is likely leading to “higher costs, less choice, less innovation and lower quality of service for businesses and organizations across the UK economy.” – GOV.UK.
The investigation brought to light concerns that infrastructure experts have been battling for years: unaffordable, unpredictable pricing for locked-in services and lacklustre support. This hyperscale monoculture gives AWS and Azure control over both product quality and the price you pay for it without fear of competition.
With these findings, the CMA needed to decide on potential solutions to this market problem by August 2025.
Published this summer, the summary of final decision for the Cloud Services Market Investigation splits the CMA’s verdicts into two key areas: decision on competition, and the decision on remedies.
The decision on competition uncovered three leading adverse effects on competition, known as AECs, on the UK cloud market. The first - market concentration - observes the extremely high barriers to entry that alternative cloud and IaaS providers face, due to the dominance that hyperscale cloud already holds. Customers face a limited choice of suppliers and products as a result, funnelling down their options to server setups that may not suit their requirements.
The second AEC, the CMA finds, is cloud vendor lock-in. Provider dependency is an easy way to keep customers around, and the hyperscalers know this. By creating products and services that can’t be migrated anywhere else, AWS and Azure deter their customers from finding better suited alternatives. Because of this, businesses feel they have very limited choice in their infrastructure, and even if there are better suited, cost-optimized alternatives, a complex migration process can make it seem too costly and out of reach.
As the CMA says, “These barriers can restrict customers from responding to attractive offers or accessing innovative new services from another provider, leading to weaker competition between providers.”
And finally, the third AEC is Microsoft’s software licensing. By setting terms that make it harder and more expensive to use its essential software on rival clouds, Microsoft tilts the playing field in Azure’s favour. These restrictions mean that equivalent services on AWS or Google Cloud can end up costing more or not being available at all. The result is weaker competition, leaving customers with fewer genuine choices and less pressure on providers to deliver value.
As part of this final verdict on the UK cloud services market, the CMA is recommending using its Digital Markets, Competition and Consumers Act (DMCCA) powers to launch strategic market status (SMS) investigations into AWS and Microsoft Azure.
The DMCCA, which came into force in 2024, gives the CMA new tools to regulate businesses whose dominance risks disrupting competition. Under these powers, companies that meet the criteria for SMS (i.e., those with the ability to shape how other businesses behave in that space) can be faced with “targeted and bespoke interventions” to address the identified concerns.
For the cloud industry, this move could mark a significant turning point. An SMS designation might not bring about radical restructuring and change to AWS or Azure, but it could prompt shifts in their structure and behaviour, reshaping how pricing and interoperability is handled.
While the industry waits for the CMA’s next steps (due to be announced in early 2026), the message is clear: the regulator is prepared to use its new legal powers to keep the UK’s cloud market open, fair, and competitive, ensuring the freedom of choice for all businesses to find their optimal infrastructure. Without it, barriers to entry for alternative providers rise, lock-in deepens, and Microsoft’s licensing tightens its grip, leaving UK businesses paying more for less.
As the CMA sharpens its scrutiny of the hyperscalers, we’re already seeing a shift in sentiment across the market. More organizations are questioning their long-term dependence on AWS and Azure, and looking instead for greater transparency, flexibility, and cost certainty.
Our customers tell us that trust and predictability are now just as important as performance. They want to know their infrastructure partner is working with them, not against them. That’s why we’re weighing in on these developments: because the CMA’s findings confirm what our customers have been saying for years, and the demand for competition in the cloud has never been stronger.
You can view the final decision report here.
Nathan studied Creative Writing at Bath Spa University, including a six-month Erasmus scheme at Stockholm University in 2020. Outside of work, Nathan is both a film buff and car enthusiast.
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