The cloud computing services of Internet giants Amazon and Microsoft should be designated as ‘gatekeepers’ under the EU Internet rules, the EU Commission said in a preliminary view Thursday.
In the cases of their cloud computing services Amazon Web Services (AWS) and Microsoft Azure (Azure) the Commission preliminarily finds that the largest and second largest cloud computing services in the EU respectively are an important gateway between businesses and their customers in the EU. This is the case despite them not meeting the Digital Markets Act’s (DMA) quantitative thresholds for designation.
“Today, we take the preliminary view that Amazon’s and Microsoft’s respective cloud services, AWS and Azure, should fall under the DMA”, said EC executive vice-president Teresa Ribera: “Respecting their rights of defence and the rule of law, Amazon and Microsoft now have the opportunity to respond before any final decisions are taken.”
Amazon and Microsoft have already been designated as gatekeepers for other services, demonstrating their significant impact on the internal market. Their cloud computing services AWS and Azure have achieved significant turnover, and their operational capacity and investments seem to have significantly outpaced those of competitors. They both have vast and entrenched user bases and appear to benefit from lock-in effects and high switching costs, in addition to a large ecosystem.
Furthermore, their portfolio of Artificial Intelligence (AI) tools and partnerships have become a decisive factor in cloud procurement. Whilst AI is significantly increasing the demand for cloud-related services, AWS and Azure appear to retain a large proportion of this increased demand within their respective ecosystems.
Finally, the Commission says both Amazon and Microsoft appear to hold ‘an entrenched and durable position in the EU cloud computing sector’, as is evidenced by AWS’s and Azure’s leading market position over many years.
The Commission stresses that preliminary findings do not prejudge the outcome of an investigation. Amazon and Microsoft can now exercise their rights of defence, including by examining the documents in the Commission’s investigation file and replying in writing to these preliminary findings.
