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MulTI-Cloud Services: OFCOM and European Commission Diverge on Proposed Measures to Regulate the Cloud Infrastructure Market

by Fieldfisher - 1 August 2023 

On 14th July, the European Council confirmed that the draft compromise text for the European Data Act ("EU Data Act") was agreed by the Permanent Representative Committee following the agreement reached between the European Parliament and the Council of the EU on 28th June. The EU Data Act aims to boost the EU’s data economy by, among other things, unlocking industrial data (and optimising its accessibility and use), facilitating, switching between cloud and edge services and fostering a competitive and reliable European cloud services market.

In a related development, OFCOM has provisionally proposed to refer the cloud infrastructure services market to the Competition and Markets Authority to carry out a market investigation OFCOM published its initial findings as part of its market study into public cloud services. The initial conclusions were that there were features of the cloud infrastructure services market that impeded competition in the UK (and that the market for cloud infrastructure services is currently heavily concentrated in the UK with AWS and Azure being the pre-eminent providers).

In this article, we assess some of OFCOM's main findings in respect of the cloud infrastructure services market, what the potential impact would be of OFCOM's proposed interventions and how the EU's Data Act is likely to impact switching between cloud infrastructure providers.

Market features impeding multi-cloud strategies.

OFCOM highlighted three features of the cloud infrastructure market that have the potential to make it more difficult for customers to switch and use multiple cloud infrastructure providers:

• Data Transfer ("egress") fees – charges that customers pay to transfer their data out of a cloud

provider's infrastructure.

• Technical restrictions on interoperability – practices adopted by the major infrastructure providers that result in considerable effort required by customers to reconfigure their applications and data to work on alternative cloud infrastructure platforms; and

• Committed spend discounts – OFCOM argues that the structure of these discounts can incentivise a customer to remain with a single cloud infrastructure. provider.

Read the full publication here.

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