As it reaches the midway point of its probe into UK cloud services, Ofcom has said it is considering referring the industry to the Competition and Markets Authority (CMA) for further investigation.

In an interim report, the regulator said that cloud providers were making it difficult for customers to switch or use multiple cloud suppliers by charging high fees or imposing technical restrictions, suggesting this could limit competition.

Ofcom added it was “particularly concerned” about Amazon Web Services (AWS) and Microsoft due to their dominant market position.

The regulator is halfway through an investigation into the UK cloud infrastructure market which began in September 2022, with the results expected to be published in a final report in October 2023.

The report said that while the market was providing innovative services and providing discounts, should the lack of competition go unchecked, it could “deteriorate.”

Ofcom raised three particular areas of concern. It said that egress fees, which are the charges that customers pay to transfer data out of a cloud, were too high and can discourage users from switching providers or using multiple providers. The regulator also said that technical restrictions on interoperability and committed spend discounts were harming competition.

National Technology News has reached out to Microsoft and AWS for comment.

Commenting on the news Fergal Farragher, Ofcom's director responsible for the investigation, said: “We’ve done a deep dive into the digital backbone of our economy, and uncovered some concerning practices, including by some of the biggest tech firms in the world.”

He added: “High barriers to switching are already harming competition in what is a fast-growing market. We think more in-depth scrutiny is needed, to make sure it’s working well for people and businesses who rely on these services.”

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