UK regulator orders AWS and Microsoft to curb cloud lock-in, targeting egress fees and licensing limits

The UK Competition and Markets Authority on Wednesday ordered Amazon Web Services and Microsoft to reduce barriers that lock customers into their clouds, requiring changes to data egress pricing and software licensing in the United Kingdom. The decision caps a two year probe of cloud infrastructure services that Ofcom valued at about 7.5 billion pounds in 2022, and it targets practices the regulator said raise switching costs for businesses.

The CMA said the remedies will limit punitive data transfer fees, mandate fair exit terms, and require Microsoft to offer equivalent licensing for Windows Server and Microsoft 365 on rival clouds. The authority will appoint a monitoring trustee and can impose fines of up to 10 percent of a company’s global turnover for noncompliance under the Enterprise Act.

Ofcom referred the market to the CMA in October 2023 after finding that AWS and Microsoft held a combined 70 to 80 percent share of UK cloud infrastructure services, with Google Cloud at 5 to 10 percent. Ofcom pointed to egress fees, committed spend discounts, and technical restrictions as obstacles to multicloud adoption that could harm competition.

Microsoft’s cloud licensing has also drawn scrutiny in Brussels since 2023 after complaints from OVHcloud and other European providers. Microsoft revised some terms in the European Economic Area in 2023, and trade group CISPE, which is backed by Amazon, said those changes excluded AWS. The CMA said licensing parity across providers is necessary for effective rivalry.

Amazon has argued that egress fees reflect real network costs and that it already offers free outbound data for some services up to defined thresholds. Microsoft has said it is working to address partner concerns and has expanded certain licensing changes beyond Europe. Both companies said they would review the ruling and engage with the regulator.

The CMA set a nine month implementation period, with initial progress reports due in the first quarter of 2027. Providers must also supply transparent and machine readable usage data to support automated workload portability across clouds.

The order increases pressure on regulators in the United States, where the Federal Trade Commission began collecting information on cloud competition in 2023, and on the European Commission as it monitors hyperscalers alongside the Digital Markets Act. If similar rules spread, enterprises could see lower switching costs and fewer licensing restrictions, which would alter pricing tactics across infrastructure and database services.