Earlier this year, the UK’s Competition and Markets Authority (CMA) provisional ruling concluded that the cloud storage market, as it stands, is fundamentally anti-competitive. At the heart of this issue lies the dominance of the three hyperscalers – Amazon Web Services (AWS), Google Cloud, and Microsoft Azure. The three tech giants have maintained a firm hold over the industry for years, leveraging their market power to impose hefty data access fees and locking in customers.
Most recently, AWS escalated the dispute by accusing Microsoft of employing anti-competitive tactics. Google quickly threw its weight behind AWS’s claims, citing instances where customers had opted for Microsoft Azure not out of preference, but because of restrictive licensing conditions.
According to Google, without regulatory intervention, Microsoft could establish a near-monopoly in the UK cloud sector within the next five years. In response, Microsoft defended its practices, asserting that its pricing model is both fair and necessary to safeguard its intellectual property.
While the hyperscalers wage their cloud storage war, UK businesses are locked into an imbalanced system that does not have their best interest at heart – with limited choice and costs that only increase.
VP & GM EMEA at Wasabi.
Transparency is vital
One of the key anti-competitive practices that the CMA has identified is the unfair use of egress fees, which are charges imposed when businesses move their data out of a cloud provider’s network. While businesses should own their own data and be able to access and move it freely, they are prohibited from doing so without incurring fees.
These fees can add up to be a significant cost for businesses. Wasabi’s research has found in Europe 47% of cloud storage costs stem from data retrieval, with the actual stored capacity making up the remainder. The impact is not just financial - 55% of European organizations saying that egress or other data access fees (API calls and data outflows) associated with moving their data out of a public cloud environment have delayed IT or business initiatives.
This practice does not provide customers with clear, predictable pricing. Often, they later discover hidden fees and end up paying more than expected and budgeted for. This has a negative impact for businesses of all sizes, hindering financial planning. It can be especially disastrous for small businesses with limited financial flexibility to absorb hidden costs.
Unexpected costs and their impact are bad enough but another tactic raising competition concerns is the bundling of essential services—such as storage and compute—with proprietary offerings like voice recognition, analytics, and blockchain tools.
Vendors often require customers to purchase storage alongside these supplementary services, limiting flexibility. This approach reinforces the "walled garden" ecosystems built by hyperscalers, making it increasingly difficult for customers to mix and match best-of-breed solutions from different providers.
Creating an open and level playing field
Transparent and predictable pricing is a cornerstone of good business practice across the UK economy, yet the cloud market continues to fall short of this standard. For organizations making decisions about cloud data and services, understanding the full cost upfront is essential. Without clear pricing structures, businesses are left navigating uncertainty, undermining their ability to plan effectively and make informed decisions about their data.
Cloud pricing should also be predictable, and easy to understand. Businesses need to confidently know what their cloud bill will look like at the end of each billing cycle. To support this, cloud providers should provide customers with cost estimation and monitoring tools, so they can accurately forecast costs over daily, monthly, or annual periods. Capabilities like real-time dashboards, consolidated spend reporting, and automated alerts for unusual usage patterns can support businesses in maintaining control and track of cloud costs.
These tools empower organizations to optimize their data strategies—ensuring data is stored and accessed efficiently, where and when it’s needed, and at a cost that aligns with business goals. Ultimately, this level of transparency fosters smarter decision-making and reduces financial risk.
Building a better cloud for Britain’s future
As scrutiny from regulators intensifies, the spotlight on the hyperscalers is only set to grow. These providers face a pivotal choice: proactively embrace reforms that foster competition and pricing transparency, or risk regulatory measures being imposed that are designed to force change.
Current practices such as egress fees, restrictive licensing, and deliberately opaque pricing structures are incompatible with the needs of modern UK businesses. These tactics entrench vendor lock-in and limit customers’ ability to choose solutions that align with their needs and goals.
The UK has made significant strides in nurturing a world-class tech ecosystem - one built on innovation, agility, and ambition. To continue this, a competitive UK cloud sector is essential as it provides the utility on which technologies such as Generative AI are built on. Creating a fairer market will support businesses in adopting the best tools for their needs, drive growth, create new jobs and support the broader economic scene.
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