UK Cloud Market Shake-Up: Impact of CMA's Regulatory Push on Enterprises and Hyperscalers

The announcement of the UK’s Competition and Markets Authority (CMA) preparing to fundamentally reshape the cloud computing landscape marks a pivotal moment for enterprises, technology vendors, and the broader digital ecosystem. The UK’s ongoing cloud market investigation—sparked by Ofcom’s referral in 2023—has set off industry-wide anticipation, signaling that landmark regulatory changes are imminent. While Amazon Web Services (AWS) and Microsoft Azure—who collectively dominate up to 80% of the UK’s infrastructure-as-a-service market—have asserted the value of their scale and investment, regulators and large enterprise customers are questioning whether such dominance comes at the cost of competition, transparency, and consumer choice.

The UK Cloud Services Market: Concentration Under the Microscope​

With the UK’s cloud market especially centralised—AWS and Microsoft Azure reportedly stretch between 70% and 80% of market share and Google Cloud lags significantly with 5–10%—scrutiny over competitive practices is intense. The CMA’s provisional findings, published in early 2025, shine an unflinching light on entrenched market behaviours and barriers to competition. Although the final determinations are pending, the CMA’s language offers strong clues as to imminent regulatory shifts.

Key Competition Barriers Identified by the CMA​

According to the CMA’s provisional report and independent market analysis, three primary competitive bottlenecks stand out:

• Excessive egress fees: Both AWS and Microsoft impose substantial charges for withdrawing data from their platforms. These “egress fees” functionally penalise customers for moving data out—creating costly friction for those seeking to change or adopt additional providers. This has been widely described as a core mechanism of “cloud lock-in.”
• Restrictive software licensing (especially by Microsoft): Complex, often opaque licensing terms—particularly involving Microsoft software on non-Azure infrastructure—inflate costs and suppress multi-cloud adoption. Customers face both direct expenses and strategic inflexibility, making competitive choice more expensive.
• Limited interoperability and portability: Lack of open APIs and standard data formats diminishes customers’ ability to shift workloads or orchestrate multi-cloud strategies without significant engineering overhead. The result is heightened reliance on a single vendor’s proprietary stack.

These issues are hardly parochial: similar concerns have triggered regulatory scrutiny in Europe, Australia, and beyond. However, the UK’s investigation is emerging as the global bellwether, propelled by far-reaching new regulatory tools under the Digital Markets, Competition and Consumers Act (DMCCA).

Regulatory Remedies: What Should Enterprises Expect?​

While the CMA’s final report is scheduled for release on 4 August, its provisional findings and surrounding industry debate point toward several probable rule changes.

1. Egress Fees: Caps or Prohibitions Loom​

Perhaps the most widely anticipated remedy is a cap—or outright ban—on egress fees. The UK’s watchdog may require hyperscalers to make data export either totally free or strictly cost-reflective. For enterprise customers, this lowers the cost and complexity of moving workloads across clouds or back on-premises.

Enterprise Implications​

• Increased workload mobility: Organisation will gain the freedom to shift applications and data among clouds with less financial penalty, supporting multi-cloud and hybrid architectures.
• Enhanced negotiating leverage: Customers may find themselves in a stronger position during contract renewals, as the threat of switching becomes more credible.
• Network and connectivity opportunities: Greater fluidity is likely to drive demand for interconnection services, cloud on-ramps, and carrier-neutral data centre offerings.

While AWS and Microsoft warn that “free” egress could disrupt investment and jeopardise security (claims that remain disputed and would require regulator validation), many industry players see these arguments as lobbying efforts to maintain legacy profits.

2. Software Licensing: Toward a Level Playing Field​

The CMA’s investigation identifies Microsoft’s licensing terms as a particularly acute inhibitor of competition. Current policies mean that running traditional Microsoft workloads—like Windows Server or SQL Server—on third-party clouds can be significantly more expensive and operationally complex than on Azure.

Possible Regulatory Interventions​

• Mandatory licence portability: The CMA may require Microsoft to allow true “bring-your-own-licence” (BYOL) parity across all cloud environments, not just Azure.
• Ban on tying support to Azure: Current support and compliance offerings may no longer be conditional on using Microsoft’s own infrastructure.
• Clarified and published pricing: Transparent, predictable licence costs across all environments.

Enterprise Implications​

• Direct cost savings: The ability to deploy Microsoft workloads on AWS, Google Cloud, or smaller UK operators without incurring punitive licence surcharges.
• Multi-cloud flexibility: Enterprises could more readily pursue backup, disaster recovery, or workload optimisation across clouds without licensing friction.
• Procurement empowerment: IT teams would gain greater clarity for planning and negotiation.

Several industry bodies caution that licensing reforms are likely to encounter intense legal resistance from Microsoft; technical enforcement may also prove complex, especially with legacy perpetual licences.

3. Interoperability and Portability Mandates​

A third anticipated area of regulatory action is the requirement for open standards and APIs. The CMA has already floated the idea of mandating support for well-defined data formats and migration tools, obliging hyperscalers to lower technical barriers to workload movement.

Enterprise Implications​

• Easier switching between providers: Reduced time, cost, and risk associated with data and application migration projects.
• Broader provider landscape: The reduction of “vendor lock-in” could encourage more UK-based or sovereign cloud offerings to emerge and compete, especially in data-sensitive sectors like healthcare or public services.

International precedent shows that open standards can spur competitive infrastructure ecosystems—though real-world impact often hinges on the technical detail and enforcement of the resulting regulation.

4. Strategic Market Status (SMS) Designations​

Under the UK’s DMCCA, the CMA gains sweeping authority to designate firms with “Strategic Market Status” if they exert significant gatekeeper control. This potentially places AWS and Microsoft on a regulatory watchlist, subject to ongoing conduct requirements, enhanced transparency, and streamlined complaints processes.

Enterprise Implications​

• Faster dispute resolution: IT buyers frustrated by opaque billing or unresponsive vendor support could see recourse options improve.
• Pricing predictability: Obligations for routine reporting and transparent pricing structures can aid forecasting and long-term planning.
• Potential compliance overhead: Designated firms may pass on the costs of compliance via service pricing, a development that should be closely monitored.

The impact of an SMS designation is likely to extend beyond pricing, influencing everything from security support standards to environment sustainability reporting.

Why the UK Cloud Decision Matters Globally​

Although the CMA’s jurisdiction is explicitly domestic, its remedies often reverberate internationally. The UK frequently acts as a “regulatory laboratory,” with decisions shaping approaches in larger markets, including the EU.

• European Union: The European Commission’s Directorate-General for Competition is examining similar cloud market concentration and software tying issues, with a parallel focus on Microsoft licensing.
• Australia: The Australian Competition and Consumer Commission (ACCC) has cited the CMA’s work in shaping its own ongoing inquiry.
• United States: While US antitrust action in tech has centred more on consumer platforms than on the infrastructure cloud, the UK’s approach is being watched closely by advocacy groups.

A strong regulatory push in one region puts pressure on hyperscalers to harmonise their practices globally, especially for multinational customers with cross-jurisdictional workloads.

Strategic Risks and Opportunities for Enterprises​

While much of the regulatory discussion concerns obstacles to competition and innovation, savvy IT and procurement teams should also consider possible unintended consequences and strategic opportunities.

Strengths and Opportunities​

• Multi-cloud strategies made easier: Reduced lock-in, lower data mobility costs, and harmonised software licensing terms help CIOs confidently pursue best-of-breed cloud architectures.
• Procurement leverage: As barriers fall, enterprises can negotiate harder and play vendors off against one another, driving down total cost of ownership.
• Network flexibility: Increased freedom to move between cloud and on-premises environments may upend traditional network architectures, boosting demand for connectivity and peering services.
• Ecosystem expansion: Smaller UK and regional cloud providers could fill niche gaps, enabled by lower egress costs and improved portability.

Potential Risks​

• Unintended cost-shifting: Hyperscalers, if forced to forego profitable egress fees or licensing surcharges, may seek to recover lost revenue through other means—such as increased base pricing for compute or storage.
• Implementation ambiguity: Regulatory mandates around “open” standards or “cost-reflective” pricing often leave considerable room for interpretation, possibly leading to uneven enforcement and confusion in the short term.
• Investment incentives: There is always a risk—articulated repeatedly by both AWS and Microsoft—that more intrusive regulation could chill investment and slow rollout of new data centre infrastructure, although this claim warrants independent scrutiny.
• International divergence: Multinational organisations must monitor the evolving landscape and avoid building architectures that inadvertently exploit, or are threatened by, local regulatory quirks.

Telecoms, Data Centres, and Interconnect: Secondary Markets in the Spotlight​

The draft remedies are not limited to direct cloud customers. Should egress fees fall or migration between clouds become simpler, the resulting traffic surge stands to benefit several adjacent sectors:

• Carrier-neutral data centres: As cloud-to-cloud and cloud-to-premises traffic grows, colocation providers may see rising demand for cross-connects, interconnection fabrics, and managed migration services.
• Network carriers: More dynamic traffic flows could reverse the recent trend toward hyperscaler-owned private backbones, injecting new growth opportunities for public network operators.
• Cloud migration and consulting firms: Barriers to multi-cloud adoption have historically led many firms to defer cloud exit or cloud arbitrage projects. Lower switching costs could unleash pent-up demand for migration services, performance audits, and cross-cloud orchestration tools.

However, these opportunities won’t be evenly distributed. Enhanced portability may also incentivise hyperscalers to build their own interconnect points, further eroding the role of traditional telcos and neutral hosts where public-private competition intensifies.

Preparing for the Next Phase: Steps for UK IT Leaders​

With the CMA’s landmark decision looming, UK enterprises and public sector IT leaders are advised to:

• Review current cloud contracts: Understand the true cost of egress and the portability of software licences, and identify areas where new rules could quickly reduce expenditure or enable better vendor terms.
• Strengthen vendor management: Build internal expertise in negotiating multi-cloud, hybrid, and sovereign cloud architectures.
• Futureproof architectures: Where possible, prioritise open standards, cross-cloud orchestration tools, and architectures that insulate against vendor lock-in—regardless of regulatory outcomes.
• Engage with regulators: Participate in industry consultations and forums, providing evidence of real-world impact to shape practical remedies.

The Road Ahead: UK’s Cloud Policy as a Global Signal​

As the final CMA report approaches, most observers expect at least partial reforms on egress fees and licensing parity, with interoperability mandates and SMS designations also likely. Technology leaders should treat this as a rare window not only to cut costs but to architect for flexibility, resilience, and competitive advantage amidst a more open, interconnected cloud market.
Global cloud giants, meanwhile, must adapt to a regulatory regime that, while still business-friendly, increasingly prioritises customer mobility and market contestability over pure scale. The precise regulatory scope and technical detail will determine how far the UK’s “cloud shake-up” ripples: into EU Digital Markets Act enforcement, into US antitrust discussions, and into the calculus of cloud buyers worldwide.
With the stakes high, and the opportunity to redraw the battle lines of digital infrastructure, the coming months may define a new chapter for enterprise cloud strategy—one where control, choice, and cost transparency are set not by hyperscale vendors but by independent, accountable regulation. Enterprises across the UK and globally will be watching—and preparing to act.

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Source: Capacity Media UK set to shake up AWS & Microsoft? How new cloud rules could hit IT strategy