Microsoft has sharply criticized the UK’s Competition and Markets Authority (CMA) regarding its preliminary findings in an investigation into the UK’s £9 billion cloud computing market. The technology giant accuses the regulator of failing to properly consider the transformative influence of artificial intelligence (AI), characterizing the CMA’s stance as a “fundamental mistake.”
The CMA’s initial report, released in January, expressed concerns that Microsoft was improperly leveraging its dominance in software to impede the ability of competitors like Amazon Web Services (AWS) and Google Cloud to compete effectively. Despite significant investments from technology firms in AI infrastructure, the regulator stated that it found “no significant direct impact” from AI on competition within the traditional cloud market.
In a comprehensive 101-page response issued on Friday, Microsoft contested the CMA’s conclusions, asserting, “It should come as no surprise that we disagree with substantial portions of the Provisional Decision Report. It does not reflect how the cloud computing market operates in practice.”
Furthermore, Microsoft accused the CMA of basing its analysis on “hypothetical scenarios” rather than tangible, real-world evidence, specifically regarding Microsoft’s software licensing practices in the cloud. The company also highlighted that during the regulator’s extensive investigation, UK customers, including businesses, governmental entities, and non-profits, had raised only a limited number of complaints about the nature of competition in the cloud market.
The response also took aim at Microsoft’s main competitors, pointing out that AWS has been the dominant player in the cloud sector for some time. “AWS has consistently claimed the number one spot in cloud computing globally and in the UK for more than two decades,” Microsoft argued, questioning why the CMA would intervene to support Google’s growth in the UK market.
Microsoft also criticized Google’s position in the investigation, alleging that the search giant was “talking out of both sides of its corporate mouth” by, on one hand, lodging complaints with regulators, and on the other hand, openly celebrating its rapid expansion.
AI’s impact on cloud computing
A core argument in Microsoft’s rebuttal centered on the CMA’s alleged overlooking of AI’s impact on competition in cloud computing. “Every technology market, including cloud computing, has been upended by the explosive emergence of generative AI,” the company stated, referencing the surge in demand for AI-driven cloud infrastructure since the launch of ChatGPT in late 2022.
Microsoft highlighted industry-wide investment in AI infrastructure, stating that cloud providers plan to collectively spend over $250 billion this year alone to increase capacity for AI applications. The response also referenced UK policymakers, including Prime Minister Keir Starmer, who have emphasized the importance of incorporating AI within the economy.
The tech giant concluded that the CMA’s preliminary decision risks becoming outdated before it is even finalized. “If the subject is competition, the current and future focus of the market could not be clearer,” Microsoft stated, urging the regulator to reconsider its position. The CMA’s final ruling on the investigation is expected later this year.
