Ofcom to investigate tech giants’ dominance of cloud computing

Ofcom will investigate the world’s biggest tech companies to ensure their dominance in areas such as cloud computing, messaging and smart devices works for the people and businesses of Britain, the communications regulator has said.

The cloud services investigation, which will take priority out of the three issues, will look at Amazon, Microsoft and Google.

Between them, these “hyperscalers” control more than four-fifths of the UK’s cloud computing market, about half of which is made up by Amazon.

Over the coming year, the regulator will begin investigating a wider range of digital services. WhatsApp, FaceTime and Zoom will come under the lens, with Ofcom looking at how their market power is affecting traditional calling and messaging, and whether the lack of interoperability “raises potential concerns”.

Smart speakers such as Amazon’s Echo, Google’s Nest and Apple’s HomePods will be checked, alongside smart TVs and digital personal assistants, to ensure their effects on consumer behaviour do not distort the market for TV, radio and online content.

Selina Chadha, Ofcom’s director of connectivity, said: “The way we live, work, play and do business has been transformed by digital services.

“But as the number of platforms, devices and networks that serve up content continues to grow, so do the technological and economic issues confronting regulators.

“That’s why we’re kickstarting a programme of work to scrutinise these digital markets, identify any competition concerns, and make sure they’re working well for people and businesses who rely on them.”

The cloud study, which begins in the coming weeks, “will examine the strength of competition in cloud services generally and the position the three hyperscalers hold in the market”, the regulator said in a statement.

“We will also consider any market features that might limit innovation and growth in this sector, by making it difficult for other companies to enter the market and expand their share.

“How well digital markets function will be increasingly important to the outcomes consumers experience across the sectors we regulate. We need to be looking as much at how companies are using digital infrastructure and services as we do the cables, masts and satellites that we have focused on in the past.”

The investigations will take place under the Enterprise Act 2002, which gives Ofcom the power to issue market studies in digital communications markets, and to examine potentially unfair commercial practices and contract terms.

Ofcom is expected to receive further powers to regulate internet content providers in the online safety bill. Initially planned to be passed before the summer recess, the bill was dropped for timing reasons, but the new culture secretary, Michelle Donelan, has promised to continue with the legislation with some changes.

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