EU has no antitrust concerns over cloud computing - yet: Vestager
Amazon and Microsoft, the world's biggest cloud computing service providers, have not raised competition concerns in the European Union, says the bloc's antitrust chief Margrethe Vestager.
Demand for cloud services has been rising for years, spiking sharply when the COVID-19 pandemic hit, with corresponding rises in many tech companies' profits.
Last year, Amazon Web Services (AWS) accounted for 13 per cent of Amazon's revenue but 37 per cent of its operating profit ($5.3 billion out of $14.3 billion). At the same time, Microsoft's Q2'22 (ended 31st December) profit rose to a better-than-expected $18.8 billion, with overall cloud revenue climbing 32 per cent and Azure cloud revenue up 46 per cent.
These firms' dominance in the European cloud market has caused concern among smaller competitors.
Earlier this month, French cloud computing company OVHcloud, along with German software provider NextCloud and two other firms, filed an antitrust case against Microsoft. They claim the tech giant has been stifling competition in the market and making it harder for consumers to choose services from rival firms.
The complaint focuses on Microsoft's licensing operations, alleging that the company has made it more expensive for users to switch from Azure to a competing cloud provider.
It also says that Microsoft's software performs poorly on non-Azure platforms, making it impossible for other cloud providers to compete.
However, when asked if she was concerned about these firms potentially abusing their market power, Vestager told Reuters, "No, so far we've had no concerns."
She said Gaia-X, a project to create efficient and secure cloud data and reduce the EU's dependence on Silicon Valley giants, would help to increase competition in the European cloud market.
"This is not something that we are engaged in, but I basically see it as pro-competitive when you have someone to show potential customers that there are more than two giants where you can place your business."
Microsoft Azure, AWS, and Google Cloud have a massive chunk of the European cloud market: about 69 per cent, according to Synergy Research Group.
In an industry survey last year, IT leaders said they were concerned about the unreasonable conditions certain software firms imposed for access to their cloud infrastructure; unfair licence terms; and software product bundling with cloud infrastructure services.
Vestager's comments come at a time when tech giants including Google and Apple have criticised the EU's newly-unveiled Digital Markets Act (DMA) for being stricter than originally anticipated.
EU officials agreed the text for the DMA last week. It aims to prohibit large technology firms from monopolising digital marketplaces, with massive penalties if rules are violated.
Google said that while it supports many of the DMA's goals in terms of consumer choice and interoperability, the company is worried that some of the measures may limit innovation and choice for customers in Europe (a standard line for a scared dominant firm to take. At this point it's almost a cliché - Ed.).
The DMA is expected to take effect as soon as October of this year.