Commission launches market investigations on cloud computing services under the Digital Markets Act

This article is brought to you in association with the European Commission.

The European Commission opened three market investigations on cloud computing services under the Digital Markets Act (DMA). Two market investigations will assess whether Amazon and Microsoft should be designated as gatekeepers for their cloud computing services, Amazon Web Services and Microsoft Azure, under the DMA, in other words whether they act as important gateways between businesses and consumers, despite not meeting the DMA gatekeeper thresholds for size, user number and market position. The third market investigation will assess if the DMA can effectively tackle practices that may limit competitiveness and fairness in the cloud computing sector in the EU. 

Cloud computing is the backbone of many digital services, and it is crucial for AI development. To foster innovation, trust, and Europe’s strategic autonomy, cloud services must be provided in a fair, open and competitive environment. 

Market investigations into Amazon Web Services and Microsoft Azure

Analyses of cloud markets conducted in recent years appear to indicate that the cloud computing services Microsoft Azure and Amazon Web Services occupy very strong positions in relation to businesses and consumers. Moreover, the Commission will assess if certain features of the cloud sector may further reinforce the position of Microsoft Azure and Amazon Web Services.

If the Commission’s investigation finds that Microsoft Azure and Amazon Web Services qualify as important gateways under the DMA, the cloud computing services would be added to the list of core platform services for which Amazon and Microsoft are already designated as gatekeepers.

Market investigation on the DMA’s application to cloud markets

The Commission is also gathering information from relevant market players to assess whether the current obligations under the DMA are effective in addressing practices that limit competitiveness or are unfair in the cloud sector. The investigation will cover, for instance, obstacles to interoperability between cloud computing services, limited or conditioned access for business users to data, tying and bundling services, and potentially imbalanced contractual terms.

Next Steps

The Commission aims to conclude the market investigations on Microsoft Azure and Amazon Web Services within 12 months.

Should the Commission conclude Microsoft and Amazon fulfil the criteria to be designated as gatekeepers for their cloud computing services under the DMA, Amazon and Microsoft would have six months to ensure full compliance of their designated cloud computing services with the DMA obligations.

The market investigation on the DMA’s application to cloud markets will result in a final report to be published within 18 months, which may propose the update of the DMA obligations in respect to cloud by way of a delegated act pursuant to Article 12 and 49 DMA.

Background

The DMA intends to ensure contestable and fair markets in the digital sector. It identifies large digital platforms, or ‘gatekeepers’, that provide an important gateway between businesses and users, imposing obligations and banning certain unfair practices.

Even if a large digital platform does not meet the quantitative thresholds for size, user number or market position under the DMA, if it controls an important gateway position, the Commission may investigate whether the provider should be designated as a gatekeeper.  

When conducting an investigation, the Commission assesses elements such as the provider’s size, the number of users, network effects, scale and scope effects, lock-in and switching costs, and the conglomerate corporate structure or vertical integration of that company.

In these investigations, the Commission is supported by the Authority for Consumers and Markets (ACM), the Dutch competition authority, in the form of a joint investigative team, as provided for in the cooperation rules under the DMA.