Amazon, Microsoft cloud services under investigation by UK regulators

Amazon (AMZN) and Microsoft (MSFT) are under another investigation, this time from United Kingdom officials probing the tech giants' dominance in the U.K. cloud market. According to Ofcom, the U.K.'s communications regulator, both companies held a combined 70 to 80% share of the region's public cloud infrastructure services market in 2022.

Yahoo Finance Anchors Akiko Fujita and Rachelle Akuffo break down the investigation details and discuss some of the broader concerns around the tech companies.

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Video transcript

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- Well, Amazon and Microsoft are in the hot seat after UK regulators launched an investigation into the tech giant's cloud services. The investigation comes after a study from Ofcom brought to life concerns about the ability for customers to use multiple suppliers. And we should mention for those who aren't familiar, Ofcom is UK's communication regulator.

This should not come as a surprise necessarily because Ofcom has been looking into the dominance that Amazon and Microsoft have had on cloud services for a year now. And this push for an investigation is the result of that investigation that preceded it. Now, this number, I think, Rachelle, is worth pointing out and points to why there are concerns. When you look at Amazon Web Services, Microsoft's Azure combined, they have 70% to 80% of the market.

And the concern is that they lock customers in and make it more difficult to customers to get out of that particular ecosystem, so something that they are under investigation for in the UK. There's another investigation in Japan. There's an investigation in the Netherlands, France. Not necessarily limited to the UK, but it points to where the regulation spotlight is being shined on right now.

RACHELLE AKUFFO: It's true. And obviously, because they make up the biggest share here, they got most of the spotlight. But this does speak to broader concerns that they have in the UK about the dominance of some of these companies. And as you mentioned here, it's about being able to switch-- being difficult for customers to switch, being difficult for them to be able to use multiple suppliers, and also talking about some of the software licensing practices of these cloud providers. So even though Amazon and Microsoft in the crosshairs here, certainly not the only ones the UK regulators are focusing on here, Akiko.

AKIKO FUJITA: Yeah, Google just close behind or actually I should say they're not that close behind. They are third in terms of market share, but just 5% to 10%. So that shows you the dominance from Amazon and Microsoft as well. We always look to the UK as well as the EU as a potential template, a sign of things to come in the US because they have tended to really lead on regulation, especially around tech. But certainly, a story to follow here because no question regulators here in the US are also watching this space and investigating it closely.