Could UK competition regulator (CMA) weaken Microsoft and AWS domination of Cloud services in Europe?

The UK’s Competition and Markets Authority (CMA) has dropped a heavyweight report that could have massive ripple effects across the entire European Cloud ecosystem—not just in the UK. Microsoft and Amazon Web Services (AWS) are in the hot seat as Google watches from the sidelines… for now.

So what’s really going on, and why should Cloud Service Providers (CSPs), tech leaders, and Cloud customers across Europe care? Let’s break it down.

Why is the CMA looking at Microsoft and AWS?

When success turns into dominance, regulators tend to take notice. In the UK, AWS and Microsoft together account for a combined 70–80% of customer spend in the public Cloud market. That’s a serious concentration of power.

The CMA’s latest findings argue that this dominance is leading to higher costs, limited innovation, and fewer choices for UK businesses. Microsoft, in particular, got called out for how it licenses its software—especially when it’s being used on competing Cloud infrastructure like AWS or Google Cloud. The CMA says that’s stifling competition.

Is this just a UK problem, or is it bigger than that?

It’s absolutely bigger. The UK is just the latest front in a much broader European push for more competitive and sovereign digital infrastructure. Remember, the European Commission has already laid out its Data Act and Digital Markets Act, both aimed at ensuring fairness and interoperability in digital services—including Cloud.

The UK may have left the EU, but it’s still aligned with many of the same digital priorities. If the CMA grants “strategic market status” (SMS) to AWS and Microsoft’s Cloud operations, it could unlock regulatory powers that reshape how these companies operate in the region.

What does “strategic market status” even mean?

It’s a regulatory tool the CMA can use to keep powerful companies from shaping the market to their advantage. If granted, the CMA could impose what it calls “targeted and bespoke interventions” on AWS and Microsoft.

That might mean forcing Microsoft to relax licensing rules that penalize customers for running its software on rival platforms. Or it could require clearer pricing transparency, interoperability, or even data portability features.

So is Google off the hook? They’re in third place, right?

For now, yes. Google holds less market share in the UK Cloud infrastructure space—so the CMA didn’t focus its firepower on them this time. But interestingly, Google is cheering from the sidelines. They welcomed the CMA’s findings and are calling for quick action.

According to Google Cloud EMEA’s Chris Lindsay, this is “a watershed moment” for Cloud customers and competition. The subtext? Google thinks loosening Microsoft’s grip could help level the playing field and accelerate innovation.

It’s worth noting that Google itself is facing potential regulatory action in mobile ecosystems (alongside Apple).

Is this about tech—or about money and market control?

Both. At the core of the CMA’s concern is that Microsoft and AWS are locking in customers in ways that aren’t purely about better products or pricing. When licensing models are used to make it harder (or more expensive) to move between providers, the market stops being competitive.

Add to that the massive investments these companies make—Microsoft just reported $75 billion in annual Azure revenue, with billions poured into AI infrastructure—and it’s easy to see why smaller providers are struggling to keep up.

Without intervention, the CMA argues, UK businesses could be stuck paying more for services they can’t easily swap out—even as AI and digital transformation make Cloud migration and strategies more essential than ever.

What do Microsoft and AWS have to say about all this?

Predictably, they’re not thrilled. Microsoft says the CMA has misunderstood the Cloud market, calling it more dynamic and competitive than ever. AWS is warning that over-regulation could backfire, undermining investment and innovation in the UK.

Both companies are basically saying: “Don’t break what’s working.” But critics say the market isn’t actually working—for anyone but the top two players.

Will this hurt the UK’s tech competitiveness? Or help it?

Depends who you ask. Industry groups like the Computer & Communications Industry Association (CCIA) say sweeping regulations could make the UK a less attractive place for Cloud investment, especially if companies fear regulatory unpredictability.

But others argue that rebalancing the playing field will encourage more innovation and lower costs for British (and European) businesses. More Cloud options means more competition, which in turn could drive better services and more responsible pricing.

Let’s not forget: many in Europe want more sovereign and open Cloud alternatives—not just to reduce reliance on U.S. tech giants, but to ensure that privacy, compliance, and economic development stay rooted in the region. That was certainly a core message coming from CloudFest 2025.

So what should Cloud service users—and alternative CSPs—be doing right now?

Start scenario-planning. If you’re a business locked into one of the major providers, now’s a good time to reassess your options—and your leverage. Multi-cloud strategies are increasingly essential, not just for redundancy or cost optimization, but to stay flexible if the rules of the game change.

If regulation pushes hyperscalers toward more open policies or pricing shifts, early movers could benefit. And if new players—especially European Cloud providers—gain market momentum, they’ll be looking for partners, integrations, and resellers.

If you’re a CSP, then look to make the most of uncertainty by offering alternative solutions.

Bottom line: Is Cloud regulation finally catching up to the tech?

It’s starting to look that way. The CMA isn’t alone, and Europe is sending clear signals that dominant market behaviors won’t go unchecked. Whether that leads to a more open, balanced market—or just more red tape—remains to be seen.

But one thing is clear: if you’re in the business of building or managing Cloud solutions, staying informed isn’t optional—it’s your competitive edge.