Ofcom to probe cloud, messenger, and smart-device markets

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The UK’s Office of Communication (Ofcom) is set to investigate Amazon, Microsoft, and Google’s cloud services positions.

In a statement, Ofcom said the probe is part of a new work program to guarantee that the UK’s digital communications markets are operating effectively for individuals and companies.

Cloud computing employs remote servers to provide services such as software, storage, and processing power. The user, who could be a person or a company, utilises these services but does not have direct control over them. According to Ofcom, the cloud has become a crucial component of how telecom customers receive products as viewers and listeners of TV, radio, and audio content.

Ofcom will use the Enterprise Act of 2002 to launch market research into the UK’s cloud industry in the upcoming weeks. The three biggest’ hyperscalers,’ also referred to as cloud service providers, are Amazon Web Services (AWS), Microsoft, and Google. Ofcom added that these three companies account for about 81 per cent of market revenue for public cloud infrastructure services in the UK.

Ofcom claims that its investigation will formally evaluate how effectively the market operates. Ofcom stated that it would assess the level of competition in cloud services and the market share held by the three hyperscalers. Ofcom will also take into account any market characteristics that would prevent other businesses from entering the market and gaining market share, thereby limiting innovation and growth in the industry.

Because the cloud industry is still developing, Ofcom said it would examine how the market is currently operating and how it is anticipated to change in the future. Ofcom’s goal is to spot any possible competition concerns early on to prevent them from getting entrenched as the market develops. 

According to Ofcom, it will ask interested or impacted parties for their early opinions on the UK cloud industry when it launches the market study. Within a year, Ofcom intends to consult on its interim findings and publish a full report that addresses any issues and includes any suggested solutions.

There may be adverse effects on firms and customers if Ofcom discovers that a market is not functioning properly. These effects could include higher costs, lower service quality, and less innovation. Ofcom can do one or more of the following in certain situations: offer suggestions to the government for changing rules or policies; take consumer or competition enforcement action; cite the Competition and Markets Authority (CMA) in a market investigation; and accept commitments rather than referencing market research.

Ofcom said it worked closely with the CMA during the planning of the market study and throughout the project. The market study will be led by Ofcom, who will rely on its considerable expertise in the communications sector and consider that the cloud is increasingly crucial to the internet’s infrastructure.

A more extensive program of work to investigate additional digital industries, such as online personal communication apps and devices for accessing audiovisual content, will also be launched by Ofcom over the upcoming year.

According to Ofcom, they are curious about how applications like WhatsApp, FaceTime, and Zoom are changing how traditional calling and messaging are used, as well as how competition and innovation in these areas may change over the next several years.

The nature and level of competition among digital personal assistants and audiovisual “gateways,” such as connected televisions and smart speakers, via which users access traditional TV and radio as well as Internet material, is another prospective area of interest for Ofcom.

Ofcom stated that it would examine the dynamics of competition in the industry to see whether any possible areas called for a more formal investigation. Analysis of consumer behaviour, upcoming trends, major players’ roles and business models, and their negotiating position with content providers are all part of Ofcom’s work.

Ofcom Director of Connectivity Selina Chadha said digital services had changed how people live, play, and conduct business, but as platforms, devices, and networks that provide content continue to proliferate, regulators are faced with a growing number of economic and technological challenges.

“That’s why we’re kick-starting a programme of work to scrutinise these digital markets, identify any competition concerns and make sure they’re working well for people and businesses who rely on them,” Chadha added. 

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