Ofcom says the UK cloud market is dominated by Amazon and Microsoft, which make up around 70-80% of the sector, while Google holds 5-10%.
Off the back of this investigation, cloud hyperscalers are under increased scrutiny, with the CMA investigating egress fees and technical barriers to moving data between cloud environments.
Paul Mackay, vice president for cloud – EMEA and APAC at Cloudera believes this is causing a shift in the cloud market as the hyperscalers and other smaller cloud providers are reassessing their practices and policies – perhaps in anticipation of the CMA’s findings.
“We’ve seen the hyperscalers all announce flexibility regarding egress fees recently. However, it’s important to note that this only applies if you’re moving all of your data from a hyperscaler’s cloud,” Mackay told Capacity.
“Egress fees will still apply when transferring just a subset. But this move should be welcomed by customers, who will now have a bit more freedom to move data between cloud providers – although it’s unlikely this will eliminate cloud lock-in entirely.”
Mackay adds that we’re also seeing smaller cloud providers offering unconditional egress fee waivers in response to increased scrutiny of the hyperscalers. As a result, the investigation could enable them to differentiate themselves from larger players and help to drive business.
According to Mackay, some factors lead him to doubt that the recent adjustment in egress fees will eliminate cloud lock-in.
Cloud lock-in (also known as vendor lock-in or data lock-in) occurs when transitioning data, products, or services to another vendor's platform is difficult and costly, making customers more dependent (locked-in) on a single cloud storage solution.
Mackay says this is more than just a financial issue and egress fees are just one facet of the CMA probe. So, even if actions are taken and egress fees are entirely abolished, it’s unlikely to unleash “a flurry of activity that upends the status quo”.
“There are also technical barriers to cloud lock-in,” Mackay believes.
“Each hyperscaler has its own security posture, tooling, and configurations, which all require a unique set of skills to manage. These nuances make interoperability between cloud platforms a real challenge.”
Unless these technical barriers are also addressed and removed, customers will still feel locked-in to their current cloud providers, as they can’t simply lift and shift data, Mackay says.
With the investigation set to conclude next year, there are several steps organisations can take to address these issues now.
“Developing a modern data architecture underpinned by a unified data platform can offer organisations greater flexibility,” Mackay says.
He says this provides a layer of abstraction that makes it easier to move data from cloud to cloud or from cloud to on-premise, and enables organisations to drive value from their data, no matter where it resides.
For his expectations regarding the outcome of the CMA investigation, Mackay is hopeful it will give customers freedom when choosing and switching between service providers.
“If we think back to how difficult switching banks or energy, internet and mobile providers used to be, it was almost more trouble than it was worth, fraught with delays and endless red tape.
“As a result, regulators stepped in, industries modernised, and it became much easier to move between service providers, giving consumers more flexibility and choice.”
Mackay adds that while regulatory investigations may initially create uncertainty and disruption, they can foster a healthier and more competitive environment in the long run, which benefits both businesses and consumers.
“If certain practices such as egress fees and interoperability hurdles are restricted – or even abolished entirely – it will definitely benefit customers.
“This would also create opportunities for smaller players to gain market share or for new entrants to emerge with innovative solutions.”
