The EU is also probing whether the DMA is effective in addressing practices that limit competitiveness or are unfair in the cloud sector.
The European Commission is investigating Amazon and Microsoft to assess whether the companies should be designated as gatekeepers for their cloud computing services, according to an announcement released today (18 November).
The EU wants to determine whether AWS and Microsoft Azure should be considered as important gateways between businesses and consumers, despite not meeting the thresholds for size, user number and market position under the region’s Digital Markets Act (DMA). Bloomberg first reported a possible EU investigation into cloud giants yesterday (17 November).
The EU says that its analysis into the companies show “very strong [market] positions” occupied by Microsoft and Amazon’s cloud services. Online estimates shows that AWS holds around 6pc of the web hosting market, or around 50m live websites. Meanwhile, Microsoft Azure currently has a nearly 1pc share of the pie.
Apart from their strong market positions, the Commission also wants to investigate whether certain features of the cloud sector could “further reinforce” the companies’ lucrative positions.
Depending on the result of the EU’s investigation into the companies, the cloud computing services could be added to the list of core platform services.
Amazon is already designated as a core platform service for its online marketplace, and Microsoft for its Windows operating system.
The investigation comes after both Amazon Web Services (AWS) and Microsoft Azure suffered from outages last month.
On 20 October, a major outage at AWS disrupted services for nearly half a day, affecting dozens of large companies, as well as banking and government services. It is estimated that the financial impact of the outage could easily reach into the hundreds of billions.
Meanwhile, a major outage at Microsoft Azure on 30 October affected the company’s own brands as well as other businesses such as Vodafone, Heathrow Airport and Alaska Airlines. The outage even disrupted government processes, with a planned vote regarding legislation amendments in the Scottish Parliament being suspended as a result.
Third probe
In a third investigation, the EU will look inwards, probing whether the DMA can effectively tackle practices that could limit competitiveness and fairness in the cloud computing sector in the EU.
Authorities are already gathering information from relevant market players to assess whether the legislation is effective in addressing practices that limit competitiveness or are unfair in the cloud sector, the EU said.
The investigation will look to understand obstacles to interoperability between cloud computing services, limited or conditioned access for business users to data, tying and bundling services, and potentially imbalanced contractual terms.
The region’s probe into Azure and AWS is expected to be completed in a year. If designated as gatekeepers for cloud services, Microsoft and Amazon would be given six months to ensure full compliance with the DMA’s requirements.
Non-compliance under the DMA can result in fines up to 10pc of a company’s global annual turnover. Earlier this year, Apple and Meta became the first companies to be fined under DMA after being hit with fines of €500m and €200m respectively for breaking the region’s laws.
Meanwhile, the EU’s investigation into DMA’s effectiveness in the cloud sector is expected to be completed in 18 months. This could result in updates to the law in respect to cloud services.
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