Report from the Wall Street Journal
In Brief – The European Commission has announced that the Amazon and Microsoft cloud services should be designated as core platform services under the Digital Markets Act (DMA) gatekeeper law. The regulator believes that Amazon’s AWS and Microsoft’s Azure hold powerful market positions, citing their revenue, investments, extensive customer bases and the growing role of artificial intelligence in driving cloud demand, adding that the companies appear to retain much of that AI-driven demand within their own ecosystems. Amazon and Microsoft can review the Commission’s preliminary findings and respond before a final decision is issued. Amazon said that the Commission’s assessment overlooked the breadth of competition in Europe’s cloud market and warned that additional regulation could discourage investment and innovation. Microsoft said Europe’s cloud sector remains innovative and highly competitive and pledged to continue engaging constructively with EU regulators.
Context – While Amazon holds the top market share, Microsoft has faced more regulatory scrutiny over allegations that it leverages its dominant software packages to preference its cloud business. Facing complaints to regulators by small European cloud services providers, Microsoft reached an agreement in 2024 to allow popular MS software to be hosted on the platforms of small and mid-size European cloud companies. Although this forestalled a Commission antitrust complaint, EU regulators opened the DMA market investigations that eventually led to this latest decision. In the UK, the Competition and Markets Authority investigated designating Amazon and Microsoft cloud services for regulation under the Digital Markets, Competition and Consumer Act, their version of the DMA, but closed the investigation in exchange for company commitments to promote competition and reduce fees. In the US, the Federal Trade Commission is accelerating its scrutiny of allegations that Microsoft is using its dominance in business software to unfairly preference its cloud and AI offerings, recently issuing civil investigative demands to competitors.