The CMA’s cloud decision is a missed opportunity for urgent reform

UK-based cloud companies hoped that the CMA report into hyperscaler conduct might have teeth, argues Civo’s Mark Boost. (Photo: Oselote / Shutterstock)

The CMA’s final decision on the UK cloud market arrived last week, and if it all felt strangely familiar, that’s because it was. In many ways, this is a repeat of the provisional findings, just with slightly softer language. There’s no mistaking in the report that the UK cloud market is plagued by deep-rooted issues, from extreme market concentration to technical and commercial barriers that make switching difficult, while the two dominant providers continue to post sustained, outsized profits. But having recognised the gravity of the problem, the CMA stopped short of acting with the urgency this situation demands.

Recommending Microsoft and AWS for Strategic Market Status (SMS) under the new Digital Markets Unit (DMU) powers is a welcome step in principle. But what we’re left with is a vague outline, not an action plan. There are no interim remedies, binding commitments, dates on the calendar – just a suggestion that the CMA Board might look into this again in early 2026, four years after Ofcom first began probing the market. In the meantime, the biggest players will have had half a decade to cement their advantage.

What’s most frustrating is that the CMA is failing to act on one of the most damaging mechanisms of vendor lock-in: cloud credits. These huge financial incentives are offered upfront by hyperscalers to bind customers into long-term commitments, making it near impossible for rivals to compete. Challenger providers don’t have the deep pockets to play that game, nor should they need to.

Yet the final report downplays the role of cloud credits. It treats them as a potential future problem, rather than recognising the damage they are already doing. This is a missed opportunity, one that must be corrected in any DMU investigation.

Public sector rhetoric vs reality

AI development isn’t possible without access to vast compute power, and right now, that access is largely gated by a few dominant cloud providers. If the UK is serious about becoming a leader in AI, it must start by rethinking who it trusts to build and run the foundations of that ambition.

Prime Minister Keir Starmer has been vocal about his ambition to position the UK as a global leader in AI. When he launched the AI Opportunities Action Plan in January, he didn’t mince his words, stating that “the AI industry needs a government that is on their side, one that won’t slip back and let opportunities slip through its fingers.” But that message quickly loses any credibility when public sector procurement continues to funnel opportunities to the same dominant players. In December 2023, AWS won three contracts worth £1bn in a single day. This is just one example in a long line of decisions that directly contradict the government’s own ambitions.

There is a rich ecosystem of UK-based providers ready to offer flexible, innovative alternatives, but they aren’t being given a fair shot. The government has an opportunity to lead by example, opening the door to fairer procurement and driving genuine choice into the cloud ecosystem.

Innovation demands competition…and speed

Cloud infrastructure quietly powers the backbone of our digital lives. Yet control over that infrastructure is increasingly concentrated, and with it, the ability to shape how innovation unfolds in the UK. When a handful of providers dominate the foundations, we don’t just lose choice; we lose the space for new ideas to thrive.

The CMA’s report does not lack insight – but it does lack pace. Every delay gives dominant players more time to reinforce their position and chip away at the opportunity for new entrants.

But there’s still time to get it right. The UK has the talent and the innovation to build a more dynamic and fairer cloud landscape. But it won’t happen by default. It will take courage and action.

Mark Boost is the CEO of Civo.

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