The United Kingdom’s competition regulator is facing mounting criticism as concerns grow over the dominance of a few key players in the cloud computing market. The recent resignation of Kip Meeks, chair of the Competition and Markets Authority’s (CMA) cloud inquiry, underscores a growing frustration with the pace of regulatory action, even after a comprehensive report highlighted potential issues with competition and consumer costs. This situation is unfolding against a backdrop of increasing global scrutiny of “hyperscalers” – large cloud providers like Amazon Web Services (AWS) and Microsoft – and their influence on the rapidly evolving digital landscape.
Meeks’ departure, announced in late January 2026 after a year in the role, comes nearly a year after the CMA published its findings in July 2025. The inquiry provisionally found that AWS and Microsoft hold a significant and potentially problematic, share of the UK cloud services market, with the two US hyperscalers accounting for up to 90 percent of the country’s cloud services. The CMA recommended designating these companies with “strategic market status,” a move that would subject them to stricter regulations due to their “substantial and entrenched market power.” The lack of swift action following this report prompted Meeks to step down, expressing continued concern over the slow pace of implementation. The cloud computing market is vital infrastructure for businesses and organizations across the UK economy, underpinning most business operations and supporting innovation.
Regulatory Impasse and Global Scrutiny
The situation at the CMA is not isolated. Regulators worldwide are grappling with how to address the growing power of hyperscalers. In the United States, the Federal Trade Commission (FTC) launched an investigation last month, February 2026, into Microsoft’s cloud business practices, specifically examining potential unfair advantages over competitors. The investigation focuses on Microsoft’s bundling and licensing practices, which critics argue may stifle competition. Similarly, the European Commission (EC) initiated three market investigations into cloud computing services in November 2025 under the Digital Markets Act (DMA). These investigations aim to determine whether the DMA can effectively address anti-competitive practices within the EU cloud sector. The EC is expected to release an interim report in May or June 2026, potentially outpacing the CMA’s progress despite beginning its investigation three years earlier.
Dave McCarthy, research vice president at IDC, succinctly captured the frustration surrounding the lack of decisive action. “Right now, the hyperscalers are operating business-as-usual although the CMA hits the snooze button,” he stated, highlighting the perception that regulatory efforts are lagging behind the realities of a rapidly consolidating market. This sentiment suggests a growing concern that prolonged inaction could allow these dominant players to further entrench their positions, potentially stifling innovation and increasing costs for consumers.
The Core Issues: Interoperability, Licensing, and Cost
The CMA’s inquiry identified several key areas of concern. Interoperability challenges – the ability for customers to easily move data and applications between different cloud providers – were a significant sticking point. Microsoft’s licensing policies as well came under scrutiny, with concerns raised about the cost of running Windows Server on cloud infrastructure provided by competitors like AWS, Alibaba, and Google. The report noted that running Windows Server could cost four times as much on these alternative platforms, potentially locking customers into Microsoft’s ecosystem. This lack of flexibility and potential for vendor lock-in is a central concern for businesses seeking to leverage the benefits of cloud computing.
Beyond the technical and contractual hurdles, the economic impact of this market concentration is also a major worry. According to a footnote in the CMA report, the UK is estimated to be paying approximately £500 million more for cloud services annually due to the dominance of a few large players. This additional cost underscores the need for increased competition to drive down prices and improve value for businesses and organizations relying on cloud infrastructure. The increasing importance of artificial intelligence (AI) further amplifies the urgency of addressing these issues, as competitive cloud services are crucial for supporting the development and deployment of AI technologies.
The Impact of AI on the Cloud Landscape
The convergence of cloud computing and artificial intelligence is creating a dynamic and rapidly evolving landscape. Experts predict that AI, particularly “agentic AI” – systems capable of autonomous action – will significantly reshape the cloud market. This shift is expected to drive demand for more processing power at the “edge” – closer to the data source – and necessitate a robust and competitive cloud infrastructure to support these advancements. The fundamental role of cloud infrastructure in the broader AI ecosystem highlights the importance of ensuring a level playing field for all players, fostering innovation, and preventing monopolies from stifling progress.
What’s Next for Cloud Regulation?
The resignation of Kip Meeks serves as a stark warning about the challenges of regulating powerful technology companies. The CMA has stated that Meeks completed his caseload before leaving the authority, but his departure raises questions about the agency’s commitment to tackling the dominance of AWS and Microsoft. The ongoing investigations by the FTC and the EC, along with the potential for further regulatory action in other jurisdictions, suggest that the pressure on hyperscalers is likely to intensify. The EC’s interim report, expected in May or June 2026, will be a key moment in this global regulatory effort.
The future of cloud computing hinges on the ability of regulators to strike a balance between fostering innovation and ensuring fair competition. Addressing issues like interoperability, licensing practices, and market concentration will be crucial for unlocking the full potential of cloud technology and delivering benefits to businesses, organizations, and consumers alike. The stakes are high, as the cloud is no longer simply a technology infrastructure; This proves a foundational element of the modern digital economy.
The next key development to watch will be the publication of the European Commission’s interim report on its Digital Markets Act investigations in May or June 2026. This report is expected to provide further insights into the competitive dynamics of the cloud market and potentially pave the way for more decisive regulatory action.
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