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Ofcom widens net for Big Tech probe

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Britain's competition watchdog has launched an investigation into the UK's cloud market after an Ofcom study found issues that could hurt competition.
Cloud services, which use data centres to provide remote access to software, storage and networks, have become increasingly vital to businesses.

Ofcom will be widening the scope of its probe into Big Tech, digging into competition concerns surrounding the cloud services space.

The media regulator said this morning that it would launch a market study into the sector to ensure that markets are working well for people and businesses in the UK.

Cloud services have exploded in recent years, climbing from less than 10 per cent of all firms’ global IT spending in 2018 to 17 per cent last year amid increased remote working. According to Ofcom, this figure could reach 45 per cent by 2026.

The probe largely takes aim at the largest providers of cloud services, including ‘hyperscalers’ like Amazon Web Services, Microsoft Azure and Google Cloud; these three firms alone generate around 81 per cent of revenues in the UK public cloud infrastructure services market.

On top of this, Ofcom said it would start a broader programme of work to examine other digital markets, including online personal communication apps and devices for accessing audiovisual content: hitting WhatsApp, FaceTime and Zoom.

Tech analyst at PP Foresight Paolo Pescatore said the timing of the probe was crucial as people have shown a strong appetite to buy and use a slew of connected devices such as smart speakers and messaging services.

“These have been highly sought after during the pandemic and have now become the norm in everyday usage,” he told City PM

Paul Stone, Senior Counsel at Charles Russell Speechlys, said the study was “indicative of increasing scrutiny being placed on the big tech sector”.

He suggested that it could be the “catalyst” for a full-blown market investigation by the Competition and Markets Authority, which could mean limiting any exclusivity arrangements used by the ‘hyperscalers’, as well as fresh incentives to foster new players.

The regulator could also make recommendations to government about what changes should be made.

Ofcom is already working with the CMA on the study and said it aims to consult on its interim findings and publish a final report within a year.