For years, concerns about cloud market concentration have echoed across Europe, the U.K., and the U.S. In the background, the U.K.’s Competition and Markets Authority (CMA) was investigating that very issue. After two years, the CMA concluded that the U.K. government must apply increased scrutiny to Amazon and Microsoft, the two most dominant players in the cloud market.
While this marks a welcome shift in regulatory awareness, it does not go far enough. To smaller, independent cloud providers, the new status that CMA suggested for Amazon Web Services and Microsoft reads as putting these companies on a pedestal by reinforcing their privileged position. The CMA’s conclusion also excludes Google, the third-largest cloud provider, from the investigation and fails to acknowledge smaller cloud vendors. In short, the final report is still missing critical points that the broader cloud community has raised.
The significance of the situation also goes far beyond British borders. In the U.S., where Amazon, Microsoft, and Google together held 63% of the market in Q4 2024, regulators must quickly address these similar imbalances and the issue with the U.K.’s approach, or they risk letting the same problems fester.
Strategic Market Status: A Dangerous Illusion of Reform
The CMA’s recommendation to grant Amazon and Microsoft “Strategic Market Status” (SMS) under the U.K.’s new Digital Markets, Competition and Consumers Act would place both firms under enhanced, legally binding obligations intended to tackle entrenched market power. Although the proposal includes some measures aimed at improving competition, it does not advocate strongly enough for a truly sovereign and inclusive cloud market. In fact, the introduction of SMS reads like another opportunity to reinforce the privileged position of hyperscalers, distancing them further from the commercial and operational realities of the U.K. cloud market.
The CMA doesn’t appear to be suggesting any real, workable mechanisms to empower smaller, independent vendors as an alternative to these providers. This matters because smaller providers are vital to market diversification: They offer alternative technologies, specialized and region-specific expertise, tailored services, foster innovation, and reduce over-reliance on a handful of dominant players.
The SMS label, if not paired with structural pro-competition tools, could inadvertently cement these firms’ dominance by formalizing their status as “too big to challenge.”
The CMA’s Narrow Focus Undermines Its Mission
Despite acknowledging a duopoly, the CMA’s scope is surprisingly narrow. Google, the world’s third-largest global cloud provider, is absent from serious scrutiny, despite engaging in anti-competitive practices such as backing lobbying campaigns to influence cloud regulation. Even though Google is the smallest of the major hyperscalers, it still dwarfs any European provider in terms of market power — especially in areas such as data dominance and AI infrastructure. This omission, paired with no solid strategy for enabling competition from smaller players, signals that the report’s focus is too narrow to assist in leveling the playing field.
The CMA also overlooks growing concerns about consolidation through acquisition, where hyperscalers and private equity firms continue to purchase regional cloud providers. By overlooking this pattern, the CMA misses an opportunity to address a structural threat to long-term competition and market resilience.
The Vendor Lock-In Problem
According to the new CMA report, fewer than 1% of U.K. cloud customers switch providers each year. This lack of movement stems from technical, contractual, and financial lock-ins, which not only entrench vendor dominance, but also drive-up costs, stifle innovation, and limit customer choice.
This is especially true for small and medium-sized businesses (SMBs), the backbone of the tech economy, which operate in a market increasingly controlled by hyperscalers holding 70–80% of the UK infrastructure market.
While the CMA addresses vendor lock-in by identifying barriers such as low switching rates, high egress fees, and technical interoperability issues and suggests remedies through potential SMS-driven interventions on AWS and Microsoft, it does not demonstrate how these measures would directly and materially lower those barriers for smaller providers in practice.
Cloud Sovereignty Requires More Than Regulation
The CMA’s findings validate what independent providers have been saying for years: Cloud customers deserve transparency, portability, and genuine competition. Regulatory enforcement must reflect operational reality if we are to build a truly sovereign, competitive digital economy. The CMA report, while focused on the U.K. cloud market, should serve as guidance to U.S. regulators. The same risks exist stateside, often at a greater scale.
Right now, smaller providers who have long been warning about anti-competitive dynamics remain excluded from meaningful policy engagement. That must change. During its two-year investigation, the CMA’s contact with us was minimal and limited solely to a questionnaire comparing our size and power consumption to Amazon and Microsoft. By giving minimal engagement to us and other similar-sized providers, it has sidelined the voices of important players in the market.
Solutions do exist. The U.K. and Europe both have important cloud infrastructure players who have the means, the desire, and the innovation necessary to deliver competitive and distinct cloud services. Agreements are possible that can help local providers to present real alternatives to hyperscale clouds. The recent Sovereign Cloud Manifesto, while acknowledging the reality that hyperscalers are an essential part of the market, provides concrete, actionable, and rapid solutions that support smaller and more agile providers to deliver real choice of sovereign cloud solutions.
The CMA report is potentially already out of date. The cloud market is evolving rapidly, especially now as AI makes new demands on cloud infrastructure. Focusing on yesterday’s issues and ignoring this evolution may mean that we miss this rare chance to reset the cloud landscape on both sides of the Atlantic. Policymakers have the opportunity to act now to reinforce transparency, portability, and choice by supporting smaller players as the foundation of a resilient digital future.
