UK antitrust watchdog orders AWS and Microsoft to curb cloud egress fees and ease switching after market probe

The UK Competition and Markets Authority on Wednesday unveiled a final package of remedies from its public cloud market investigation in London, ordering Amazon Web Services and Microsoft to cap data egress charges, decouple committed spend discounts from single vendor exclusivity, and separate software licensing from cloud infrastructure usage. The regulator said the measures aim to reduce switching costs and interoperability barriers that it found were dampening competition.

The decision matters for enterprise buyers that renegotiate multiyear contracts in the fourth quarter and early next year, as AI spending concentrates workloads on the largest providers. Ofcom’s 2023 market study found AWS with 40 to 45 percent UK IaaS and PaaS share and Microsoft Azure with 20 to 30 percent, with Google Cloud at 5 to 10 percent, and identified egress fees and complex discounts as key barriers to switching.

Under the CMA orders, hyperscalers must publish standardized, cost-reflective data transfer prices and offer data migration credits to mitigate switching costs within set thresholds. The watchdog also requires fair and non discriminatory licensing for popular enterprise software across competing clouds, building on complaints that vendor licensing terms penalize customers who run products on rival infrastructure.

The CMA opened the cloud market investigation in October 2023 after a formal referral from Ofcom, which had warned of lock in driven by egress charges and steep committed spend discounts that could exceed 20 percent for large customers. The authority said the remedies will be phased in over the coming months, with independent monitoring and penalties for noncompliance.

The announcement follows parallel pressure in Europe. The European Commission’s Data Act, which began to apply switching and interoperability rules in 2025, requires providers to remove commercial and technical barriers to cloud portability. UK officials said today’s package aligns with those objectives, while tailoring obligations to domestic competition concerns.

AWS and Microsoft have defended their pricing and discount structures, arguing that volume commitments reflect real infrastructure cost efficiencies. Synergy Research has estimated global IaaS and PaaS market shares at roughly 31 percent for AWS, 25 percent for Microsoft, and 11 percent for Google as of mid 2024, underscoring the scale at stake when switching frictions persist.

For the wider tech sector, the order signals an aggressive regulatory turn on cloud lock in that reaches into AI infrastructure economics, since high bandwidth model training and inference workloads amplify egress costs. Vendors across data platforms and AI tooling will now push deeper multicloud strategies, and buyers will test whether mandated portability translates into leverage on price and performance.