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Microsoft has accused UK antitrust regulators of being “backwards” by ignoring how artificial intelligence is reshaping the tech industry in response to agency investigations into the UK’s cloud computing market.
In January, competitive markets officials said in a preliminary decision after Microsoft’s long investigation into the sector “Amazon Web Services and Google are using a strong position in their software to effectively compete.”
However, despite heavy investments from large tech companies to build AI infrastructure, CMA said it has not currently seen a “major direct impact” from AI on competition in the traditional cloud market.
In a 56-page response released Friday, Microsoft called the CMA’s position on AI “a basic mistake.”
“There is a real risk that intervention in the market based on these misconceptions will backfire, leaving the UK with opposition to the CMA’s goal of a healthy, functional market with plenty of growth and investment.”
Large tech companies are investing hundreds of billions of dollars to build so-called accelerated computing systems that can provide training and large-scale language models that power Google’s Gemini and Openai’s ChatGPT.
Microsoft’s criticism comes as the CMA has faced intense scrutiny over the past few months, under pressure from the government to show it is driving growth and thwarting UK innovation. Ministers suddenly banished the agency’s chairman, Marcus Boccarink, last month, and replaced him with Doug Girl, a former head of Amazon UK.
Microsoft said the CMA’s interim decision “doesn’t reflect how the cloud computing market actually works,” claiming that UK customers raised “limited concerns” about industry competition.
UK antitrust regulators have also begun to consider whether Amazon and Microsoft should receive additional surveillance under the UK’s new digital market regime by deeming them to have “strategic market conditions” in the cloud industry.
By removing Google from its consideration and excluding other potential interventions following market research, the CMA may step in “enable Google’s growth by easing competition from its competitors.”
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Microsoft’s Azure and Amazon Web Services dominate the global cloud computing industry, each with a share of up to 40% of UK customer spending, with Google Cloud generally seen as a third.
The UK’s cloud services survey began when Ofcom, a media and communications regulator, began market research in October 2022 and referenced the CMA a year later.
The CMA research group said the general lack of competition is “inhibiting the ability of customers to switch cloud providers or use multiple clouds.”