Microsoft earns $75 billion in revenue from Azure, while the UK's Competition and Markets Authority declares that competition is not functioning effectively
The UK's Competition and Markets Authority (CMA) has proposed a series of measures to address the dominance of Microsoft and Amazon Web Services (AWS) in the country's cloud services market. These remedies aim to improve competition, reduce vendor lock-in, and enhance customer choice.
The CMA has signalled its willingness to act robustly, given the "harmful" anticompetitive traits identified. These traits include a high concentration of market share (Microsoft and AWS hold about 70–80% combined), high switching costs, and limited competition from smaller providers.
One of the proposed remedies is the designation of Microsoft and AWS as Strategic Market Status (SMS) firms under the Digital Markets Unit (DMU) regime. This would subject the tech giants to ongoing regulatory oversight and specific obligations aimed at promoting competition in digital markets.
Other proposed interventions include reducing high egress fees, mandating improvements in interoperability and technical compatibility between hyperscale cloud platforms, and restricting restrictive software licensing terms. The CMA also aims to encourage multi-cloud adoption and facilitate customer switching, particularly for small and medium-sized enterprises (SMEs).
However, the CMA’s current remedies have been criticised as tentative, and some observers call for more immediate and concrete steps to prevent Microsoft and AWS from further entrenching their dominance.
Microsoft has disputed the CMA's findings, stating that the cloud market is highly competitive and dynamic. The tech giant's overall revenue increased 18% to $76.4 billion in the most recent fiscal quarter, and its Azure cloud computing unit surpassed $75 billion in revenue during the 2025 fiscal year.
Amazon, too, has stated that the CMA's report disregards clear evidence of robust competition in the UK's IT services industry. The cloud computing market has dramatically reduced costs and expanded customer choice and flexibility, according to Amazon.
Despite the dominance of Microsoft and AWS, other cloud providers are struggling to close the gap. Microsoft trails AWS in terms of revenue in the cloud services market but is far ahead of competitors in terms of share.
The CMA's investigation follows concerns about the competitive dynamics in the cloud services market. The cloud market is experiencing rapid, AI-driven changes, according to Microsoft. The inquiry group's final report was disregarded by Amazon for ignoring clear evidence of robust competition in the UK's IT services industry.
In summary, the CMA’s remedies revolve around regulatory oversight via the DMU, pricing controls (like egress fees), enhanced interoperability, and efforts to lower switching barriers. These measures aim to create a healthier, more competitive UK cloud market dominated by fewer barriers for customers. The CMA's approach so far lacks detailed action plans or interim remedies, with a review expected only in early 2026.
Teams from Microsoft and Amazon Web Services (AWS) may encounter ongoing regulatory oversight under the Digital Markets Unit (DMU) regime, as they have been designated as Strategic Market Status (SMS) firms. The CMA proposes interventions to reduce high egress fees, improve interoperability and technical compatibility between hyperscale cloud platforms, and restrict restrictive software licensing terms to promote competition. This could potentially encourage multi-cloud adoption and facilitate customer switching, particularly for small and medium-sized enterprises (SMEs). Despite the dominance of Microsoft and AWS, other cloud providers like Edge, Xbox, and hardware manufacturers leveraging Windows technology are competing to close the gap. However, the CMA's current remedies have been criticized, and some observers are calling for more immediate and concrete steps to address Microsoft and AWS's market dominance. In the recent fiscal quarter, Microsoft's overall revenue increased by 18%, with its Azure cloud computing unit surpassing $75 billion in revenue during the 2025 fiscal year. This growth has been challenged by the Competition and Markets Authority (CMA) and Amazon, who argue that the UK's IT services industry exhibits robust competition, with the cloud computing market significantly reducing costs and expanding customer choice and flexibility.
