In 2022, the Office of Communications (Ofcom) conducted a market study into the UK cloud industry to investigate whether the UK’s cloud market was working well, and if any regulatory intervention was needed¹. Ofcom concluded that the market was dominated by AWS and Microsoft, and that competition was limited, and referred matter to the Competition and Markets Authority (CMA) for further investigation². Over the past 2 years, we have been closely following the CMA’s work to help customers understand the limitations and risks, and what they need to do in order to readily choose the best solution to match their needs.
When the CMA released its provisional findings in January 2025, Simon Hansford, Chief Commercial Officer at Civo and Former CEO of UKCloud Ltd, said³:
“The CMA's report confirms what many cloud providers in the UK already know: the UK cloud market is broken, anti-competitive, and the odds are stacked against challenger cloud providers. Egress fees, restrictive software licensing, and a lack of interoperability are not just barriers to entry - they are active deterrents to the investment and innovation in the UK that the current government is determined to secure.”
On 31 July 2025, the CMA published the summary of its final decision in respect of its market investigation into cloud services⁴. The report's findings highlighted significant concerns around market concentration, technical and commercial barriers to switching, and anti-competitive practices, setting the stage for potential changes within the industry.
Summary of the CMA findings from their cloud services market investigation
The final report from the CMA on its cloud services market investigation has shed light on the anti-competitive landscape of the UK cloud industry. The findings reveal a market that's rigged against customers and challenger cloud providers alike, with hyperscalers holding too much power and limiting consumer choice. The report's conclusions are a wake-up call, highlighting the need for greater competition and transparency.
“We consider that a more competitive market would show better market outcomes, including more consistently competitive prices, as well as further improvements in quality and innovation” - CMA investigation, summary of final decision⁵.
At the heart of the problem is the dominance of Microsoft and AWS (each having 30-40% of the market in 2024), which has created a highly concentrated market with significant barriers to entry and expansion. The CMA's investigation found that these barriers are not just technical, but also commercial, with practices like egress fees and unfair software licensing, making it difficult for customers to switch or use multiple cloud providers.
The CMA's recommendations are a step in the right direction, but the real test will be whether regulators can enforce meaningful remedies. The CMA has delayed referring AWS and Microsoft for a Strategic Market Status (SMS) investigation until 2026, prolonging market dysfunction. The industry cannot self-correct; swift intervention by the Digital Markets Unit (DMU) is critical to curb hyperscaler dominance.
The impact of market concentration
The CMA's investigation has revealed an unacceptable level of market concentration in the UK cloud services market. This concentration has significant implications for customers, who are limited in their ability to choose alternative cloud providers.
The CMA's findings demonstrate that this market concentration is having a negative impact on competition, leading to higher prices and reduced innovation. With fewer players in the market, there's less incentive for providers to innovate or compete on price, resulting in higher costs, diminished value, and customers trapped with subpar services.
As a UK-founded global cloud provider, we're committed to promoting greater competition and innovation in the cloud services market. We believe that a more competitive market will benefit customers by providing them with more choice, better services, and lower prices.
Technical and commercial barriers to switching cloud providers
The Ofcom research found that around 65% of customers cited at least one of the following technical challenges as a barrier to using multi-cloud: interoperability challenges, technological challenges, and lack of skills. This was further confirmed by the summary provided by the CMA, whereby they stated that:
“Customers face both commercial and technical barriers when seeking to multi-cloud or switch their cloud provider, and many currently think that the costs outweigh the benefits. Barriers to multi-cloud negatively affect many customers’ ability to use and integrate multiple public clouds, and this limits customers’ ability and incentive to exercise choice over their cloud provider.”
While some large organizations can afford to invest in multi-cloud architectures, the reality for most customers, especially SMEs, is very different. Switching providers or adopting multi-cloud often comes with real costs and risks that many can’t justify. Research from the CMA confirms how significant these barriers are by highlighting that:
- Egress fees⁶ can be prohibitively expensive, making it harder for smaller customers to switch or adopt a multi-cloud setup.
- Technical barriers such as inconsistent interfaces, proprietary features, and a lack of standardization make it difficult to compare or integrate services across providers. This is made worse by a shortage of transferable skills and poor transparency from providers on how to overcome these challenges.
At Civo, we’ve always believed that the cloud industry should be fair, open, and accessible to companies of all sizes. In 2024, we joined the Open Cloud Coalition (OCC), which sets out to tackle the technical and commercial barriers that make switching cloud providers difficult, such as high costs, hidden fees, and vendor lock-in imposed by dominant hyperscalers⁷.
The OCC is working to change this by advocating for open standards, interoperability, and fairer policies that promote real choice, innovation, and competition in the cloud market. To learn more about the OCC, visit the official website by clicking here.
Implications for the industry
The CMA’s final decision confirms that the UK cloud market isn’t just unbalanced, it’s structurally anti-competitive. With high barriers to entry and expansion, it’s incredibly difficult for alternative providers to grow, innovate, or compete on a level playing field.
This creates a vicious cycle: smaller providers are squeezed out, while customers face restricted choice, locked-in contracts, and limited access to better or more affordable services. The CMA found that these issues, such as technical and commercial switching barriers, market concentration, and restrictive licensing practices, each give rise to Adverse Effects on Competition (AECs). Together, they’ve created a market that doesn’t serve the best interests of UK customers or the broader digital economy.
When looking at the importance of competition for the UK cloud services market, the CMA said, “we think outcomes for customers would be better if cloud markets were more competitive. These outcomes would include more consistently competitive prices, greater prevalence of switching and multi-cloud use, and potentially higher quality and innovation.”
Despite systemic barriers, the market is maturing. Our research reveals 60% of organisations are actively rejecting single-provider dependency, 29% adopting multi-cloud and 31% hybrid models, to regain flexibility. This underscores the urgent need for CMA action: customers demand choice but need regulatory support to escape lock-in.
The next steps for the cloud industry
While this report from the CMA is a significant milestone in the journey towards a more competitive cloud services market, there is still much work to be done. We are optimistic that the report's recommendations will help to create a more level playing field and promote greater innovation and competition in the industry.
“The decision feels like a gesture, not a reset. There is still time to strengthen these proposals before implementation. A truly competitive cloud market benefits everyone in the long run, fostering innovation, attracting investors, and fuelling growth across the digital economy. It's time for bold action.” - Simon Hansford, Chief Commercial Officer at Civo and Former CEO of UK Cloud Ltd
To address these harms, the CMA proposes investigating AWS and Microsoft for Strategic Market Status (SMS) under the DMCC Act, but delays this referral until 2026⁸. This contradicts the CMA’s own mandate for Pace, Predictability, Proportionality, and Process.
Every month of delay deepens vendor lock-in and market consolidation. We urge regulators to act now: targeted remedies (e.g., conduct requirements, interoperability mandates) cannot wait while the UK’s digital competitiveness erodes.
The CMA has made it clear: these interventions are essential to fix what’s broken. While there's still some uncertainty around how and when they’ll be implemented, the direction of travel is promising. With coordinated action and continued scrutiny, we have a real opportunity to reshape the cloud landscape, one that prioritises fairness, flexibility, and innovation over entrenchment and control.
The CMA’s own findings, paired with our data showing 40% of IT leaders seek alternatives, prove customers are ready for change⁹. The DMU must accelerate SMS investigations and enforce remedies, not in 2026, but now. Delaying action only entrenches hyperscaler power. The UK deserves a cloud market that prioritises sovereignty, innovation, and fair competition, not US corporate interests.
