These factors collectively provide Amazon and Microsoft with a competitive advantage, according to Ofcom’s analysis. The report states that “limits on the ability of customers to credibly threaten to switch away can reduce the competitive pressure on the market leaders, giving them a degree of market power.” When customers encounter difficulties in transitioning between providers or adopting multiple cloud services, it can become more challenging for competitors to expand and effectively challenge AWS and Microsoft for both new and existing customers.
Moreover, Ofcom acknowledges concerns raised by certain cloud service providers regarding the software licensing practices of some industry players, particularly Microsoft. The report cites submissions claiming that Microsoft engages in practices that make it less appealing for customers to use the company’s licensed software products on rival providers’ cloud infrastructure compared to Microsoft Azure. Products such as Windows and Microsoft 365 are mentioned in these allegations, although Microsoft has disputed their accuracy.
