Microsoft hits back at UK’s cloud computing probe

Tech giant accuses CMA of ‘looking back’

Microsoft has strongly criticised the UK’s Competition and Markets Authority (CMA) over its provisional findings in an investigation into the country’s £9 billion cloud computing market. The technology giant accused the regulator of failing to acknowledge how AI is reshaping the industry, branding the CMA’s position a “fundamental mistake”.

The CMA’s initial report, published in January, raised concerns that Microsoft was leveraging its dominance in software to make it harder for rivals Amazon Web Services (AWS) and Google Cloud to compete effectively. The regulator stated it had found "no significant direct impact" from AI on competition in the traditional cloud market, despite major investments from tech firms in AI infrastructure.

However, in a 101-page response released on Friday, Microsoft took issue with the CMA’s conclusions, stating: “It should come as no surprise that we disagree with substantial portions of the Provisional Decision Report. It does not reflect how the cloud computing market operates in practice.”

Microsoft went further, accusing the CMA of grounding its analysis in “hypothetical scenarios” rather than real-world evidence, particularly in its focus on Microsoft’s software licensing practices. The company noted that UK customers, spanning businesses, public sector bodies and non-profits, had raised only limited complaints about competition in the cloud market during the regulator’s extensive investigation.

The response also took aim at its main competitors, pointing out that AWS has long been the dominant player in the cloud sector. “AWS has consistently claimed the number one spot in cloud computing globally and in the UK for more than two decades,” Microsoft argued, questioning why the CMA would intervene to support Google’s growth in the UK market.

Microsoft also criticised Google’s stance in the investigation, alleging that the search giant was "talking out of both sides of its corporate mouth" by both complaining to regulators and publicly celebrating rapid expansion. The response cited Google CEO Sundar Pichai’s recent remarks that Google Cloud had reached a $36 billion annual revenue run rate, a fivefold increase over five years.

AI’s impact on cloud computing

A central theme of Microsoft’s rebuttal was the CMA’s alleged failure to properly account for AI’s impact on cloud computing competition. “Every technology market, including cloud computing, has been upended by the explosive emergence of generative AI,” the company stated, referencing the surge in demand for AI-driven cloud infrastructure since the launch of ChatGPT in late 2022.

Microsoft pointed to industry-wide investment in AI infrastructure, claiming that cloud providers will collectively spend more than $250 billion this year alone to expand capacity for AI applications. The response also noted that UK policymakers, including Prime Minister Keir Starmer, have emphasised the need to embed AI into the economy.

The tech giant concluded that the CMA’s provisional decision risked being outdated before it was even finalised. “If the subject is competition, the current and future focus of the market could not be clearer,” Microsoft stated, urging the regulator to reconsider its position.

The CMA’s final ruling on the investigation is expected later this year.