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Amazon and Microsoft are facing an antitrust investigation in Britain after the communications regulator since there are “significant concerns” that big tech companies are abusing their positions.
Ofcom, the British communications regulator, wants to refer the whole sector to the Competition and Markets Authority (CMA). It also said it was “particularly concerned about the practices of Amazon and Microsoft because of their market position.”
Ofcom has “significant concerns” after finding “behaviors by some providers that could raise barriers to switch and use of multiple providers.”
Ofcom director Fergal Farragher, who carried out the study on the sector, said: “We’ve done a deep dive into the digital backbone of our economy and uncovered some concerning practices, including by some of the biggest tech firms in the world.”
Both Amazon and Microsoft have expressed their desire to work with the authorities. An Amazon spokesperson downplayed concerns suggesting that the UK has a diverse and booming IT industry, with customers able to choose between various IT providers.
A Microsoft spokesperson also said that the company was committed to ensuring that the cloud industry in the UK remains competitive. “We remain committed to ensuring the UK cloud industry stays highly competitive and to supporting the transformative potential of cloud technologies to help accelerate growth across the UK economy,” the spokesperson said.
Cloud services have become imperative to all participants in web-based activities due to the current nature of technology. According to Ofcom, Amazon Web Services (AWS) and Microsoft Azure control between 60% and 70% of the UK market. Google, owned by Alphabet, is between 5% and 10% of the UK market and is their closest competition.
The involved companies and other interested stakeholders will have until May 17th to submit their responses. Ofcom will decide whether or not to refer the sector to CMA in early October.
The CMA has extensive powers to force changes into the business models of entities found to distort competition. The government plans to issue legislation soon, allowing CMA to fine a company up to 10% of its global turnover.
Investigations into monopolistic and manipulative practices, especially in the IT industry, are becoming commonplace. Some larger companies worldwide are often the targets of these probes since they enjoy a large chunk of the business and have the means to abuse fair business practices to benefit. It would be interesting to see the outcome of this Ofcom investigation and what actions are taken as a result.
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