Ofcom announces UK digital services market study • The Register

The UK is set to scrutinize the role of Amazon, Microsoft and Google in the country’s £15 billion ($16.97 billion) cloud services market, with communications regulator Ofcom warning it could take action will take if competition concerns are identified.

Ofcomalso known as The Office of Communications, announced that it is launching a study into the role of the big three cloud providers in the cloud market, as part of new efforts to ensure digital communications markets are working for people and businesses in the region work well UNITED KINGDOM.

It will also examine the messenger and smart device markets, looking at services like WhatsApp and Zoom, as well as the smart speakers that are now in many homes and which up to 11 per cent of UK consumers own, according to YouGov figures .

“Digital services have transformed the way we live, work, play and do business,” said Selina Chadha, director of connectivity at Ofcom, in a statement. “That’s why we’re embarking on a program of work to examine these digital markets, identify competitive concerns, and ensure they work well for the people and businesses that rely on them.”

Noting that cloud services is a huge market that’s still growing, Ofcom cited forecasts by technology analyst Gartner that up to 45 percent of IT spending by some companies worldwide will go to the public cloud by 2026, up from less than 10 percent in 2018.

Market study of the Big Three

The regulator is therefore launching a market study “in the coming weeks” looking at the role of AWS, Microsoft and Google, which together account for around 81 percent of sales in the UK public cloud services market, it says. This is part of Ofcom’s position as a competition authority under the UK Government’s Enterprise Act 2002.

Ofcom said it intends to study the strength of competition with the cloud services market to identify anything that could limit innovation and growth by making it difficult for other companies to enter the sector and expand their market share.

But the goal is to look beyond the way markets work today and consider how they might evolve in the future to anticipate potential competition concerns and prevent them from taking hold as the market matures, he said Ofcom.

The regulator will seek initial opinions on the UK cloud market from “interested or concerned parties” and said it will consult interim results before releasing a final report setting out any concerns or proposed recommendations within 12 months of the start of the study.

If Ofcom finds that the market is not working as it thinks it should, it can recommend that the UK government make changes to regulations or policies, refer matters to the UK Competition and Markets Authority (CMA), or raise competition or consumer law issues themselves To take action .

Paul Stone, senior counsel at law firm Charles Russell Speechlys, said this inquiry is a sign that the tech sector is coming under increasing scrutiny from UK regulators and could act as a catalyst for a larger market inquiry that could doing would have a significant impact on the big tech companies.

In addition to cloud services, Ofcom will also explore other digital markets, including personal online communication apps and devices for accessing online content, such as connected TVs and smart speakers. The latter are used to access traditional TV and radio services as well as online content.

In particular, the regulator wants to examine the impact VoIP services such as WhatsApp, FaceTime and Zoom are having on traditional calling and messaging and how competition and innovation in these markets could develop in the coming years. Interoperability between these messenger and communication services has also been highlighted as an area of ​​concern.

A future area of ​​focus for Ofcom is the level of competition between digital personal assistants and the devices they embody, such as smartphones. B. Connected TVs and smart speakers. Consumer behavior as well as the role of the big players, their business models and the impact of their bargaining power towards content providers are questioned.

Services like WhatsApp and Zoom are now competing with traditional telecom services, while smart TVs and smart speakers are now playing a central role in how content is distributed and discovered by consumers, Ofcom said.

Telecoms industry analyst Paolo Pescatore of PP Foresight said this is a wide ranging investigation for Ofcom and each area needs to be assessed independently.

“Ultimately, Ofcom is concerned about the dominance of a small number of players, whose share has grown significantly,” Pescatore said, referring to the cloud, “it is becoming increasingly difficult for new entrants or emerging players to assert themselves in the established position of the big ones.”

In terms of smart devices, Pescatore said people have shown a “strong appetite” to buy and use a range of connected devices such as smart speakers and messaging services, particularly during the pandemic, and these are now the norm in everyday life become use.

“It is therefore difficult to predict what Ofcom will do if it decides that big tech companies are stifling competition. We could see restrictions and incentives to promote new players,” he added. ®

https://www.theregister.com/2022/09/22/hyperscale_cloud_probe_uk/ Ofcom announces UK digital services market study • The Register

Laura Coffey

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