The new chair of the UK competition watchdog will have to assess whether to curb the position of his former employer, Amazon, after an independent inquiry found that a lack of competition in the £9bn cloud computing market could mean British businesses are overpaying for services.
The Competition and Markets Authority (CMA), which last week announced the surprise appointment of former Amazon UK boss Doug Gurr as its interim chair, said that Microsoft and Amazon’s dominance of the cloud computing market could mean that British businesses are paying as much as £430m more annually for services than in a “well-functioning market”.
The CMA’s independent inquiry group, which launched a market investigation in 2023, provisionally found that Amazon Web Services (AWS), the tech company’s cloud computing arm, and Microsoft’s Azure each have a 30% to 40% market share, with Google Cloud Computing a much smaller third player.
The regulator also found that Microsoft was using its strength in software, such as Windows Server and Microsoft 365, to make it harder for Amazon and Google to “compete effectively for customers who wish to use Microsoft software on the cloud”.
The inquiry group said that the CMA’s board, led by Gurr, should use recently acquired digital powers to see whether Amazon and Microsoft should be designated as having “strategic market status” (SMS) in cloud services.
If they are deemed to have that status, then the watchdog can impose conduct requirements or force other changes.
The inquiry said that, if they were given that status, “we think that measures aimed at AWS and Microsoft would address our market-wide concerns by directly benefiting most UK customers and affecting the competitive conditions for other providers”.
A spokesperson for AWS said the proposed intervention was “not warranted”.
The spokesperson added: “The evidence demonstrates the IT services industry is highly competitive. Cloud computing has lowered costs for UK businesses.
“We urge the CMA to carefully consider how regulatory intervention in other areas will stifle innovation and ultimately harm customers in the UK.”
Microsoft said that the CMA should be focusing on an “AI-powered future” instead of its computer software which it called “legacy products launched in the last century”.
“The cloud computing market has never been so dynamic and competitive, attracting billions in investments, new entrants, and rapid innovation,” said Rima Alaily, corporate vice-president and deputy general counsel, of Microsoft’s Competition Law Group. “What could be better for UK businesses and government?”
The provisional findings have been published the same day as Gurr promised to make the CMA’s investigations into mergers and takeovers “simple and rapid”, after government pressure for regulators to do more to support its economic growth agenda.
He said that a regulatory environment that encouraged the “greatest possible level of business investment” would be the agency’s new “north star”.
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Gurr replaced former chair Marcus Bokkerink, who was ousted by ministers, days after the chancellor, Rachel Reeves, called the chief executives of UK regulators including the CMA to a meeting at No 11 to pressure them to do more to support growth.
The CMA had previously been heavily criticised by Microsoft for the lengthy delay in approving its £56bn acquisition of the games company Activision.
“We know it costs businesses when they have to deal with lengthy and uncertain investigations,” said Gurr, writing in the Financial Times. “Good decisions, clear decisions, rapid decisions, that’s what you tell us you need and that’s on us to deliver.”
Gurr has been appointed as the interim chair of the CMA, which aims to cut 10% of staff, for up to 18 months after the abrupt departure of Bokkerink.
His appointment was criticised by the GMB union and campaigners last week. Andy Prendergast, GMB’s national secretary, said the appointment of the former Amazon UK boss to a “body intended to combat unfair market monopolies is a slap in the face to workers”.
“Last year, the UK again delivered the lowest level of business investment in the G7,” Gurr wrote. “This has been true for far too long. We want both domestic and international businesses to see the UK as a great place to invest. This means giving startups and venture backers the confidence to launch their businesses here, not elsewhere in the world.”
Gurr spent six years at the consultancy McKinsey and was later development director for Asda, when it was owned by the US retailer Walmart, before joining Amazon in 2011. He ran the group’s business in China, commuting from his home in Yorkshire, before running Amazon’s UK arm for four years from 2016.
