EU Moves to Bring Amazon and Microsoft Cloud Platforms Under Landmark Digital Competition Rules

According to Democrata, the proposal follows an investigation by EU regulators into the cloud computing market and reflects growing concerns that the sector has become increasingly concentrated, creating barriers for customers and competitors alike.

If the preliminary findings are confirmed, AWS and Azure would become the first cloud infrastructure services to fall under the DMA, extending legislation that has until now primarily targeted online platforms such as search engines, social networks, app stores, and digital marketplaces.

The proposed designation would require both companies to comply with a range of obligations designed to promote fair competition. These include restrictions on self-preferencing, requirements to improve interoperability with competing services, and measures intended to make it easier for customers to transfer data and switch cloud providers.

The European Commission said cloud computing has become a critical component of Europe’s digital economy and an increasingly essential foundation for artificial intelligence deployment. According to the Commission, more than half of businesses across the European Union now rely on cloud services, while investment in cloud infrastructure continues to accelerate.

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Reuters reported that the Commission’s preliminary conclusions followed a seven-month market investigation examining whether AWS and Microsoft Azure meet the thresholds for designation under the DMA. EU officials argue that the companies’ market positions, combined with the costs and technical complexity customers face when changing providers, may give them entrenched market power that warrants additional regulatory oversight.

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Competition authorities have increasingly focused on concerns that organizations using cloud infrastructure can become dependent on a single provider because of proprietary technologies, data migration challenges, and integrated software ecosystems. Regulators have argued that these factors may reduce customer choice and make it more difficult for smaller competitors to gain market share.

Amazon and Microsoft have both criticized the Commission’s preliminary assessment.

According to Reuters, Microsoft said it would review the findings carefully while arguing that the cloud market remains highly competitive and pointing to increasing investment by rivals, including Google. Amazon also expressed concern that extending the DMA to cloud infrastructure could discourage innovation and investment in European digital services.

The Digital Markets Act, which entered into force in 2022 and has been applied to designated gatekeepers since 2023, is intended to prevent large digital platforms from using their market positions to limit competition. Companies designated under the law must comply with obligations aimed at ensuring fair access to digital markets, while violations can result in fines of up to 10% of a company’s worldwide annual revenue, rising to 20% for repeated infringements.

The proposed expansion of the DMA into cloud infrastructure reflects a broader shift in European competition policy toward scrutinizing foundational digital services that underpin artificial intelligence, enterprise software, and other critical technologies. Regulators have increasingly argued that cloud computing now occupies a strategic position comparable to other core digital platforms already covered by the legislation.

Source: Democrata