The UK came for Amazon’s cloud business – here’s how it’s fighting back
The UK’s competition regulator spent nearly three years scrutinising the cloud computing market, raising concerns that Amazon Web Services (AWS) and Microsoft held too much power, with each commanding roughly 30-40% of the infrastructure-as-a-service (IaaS) segment.
Data egress fees, interoperability barriers, and challenges in switching providers or adopting multicloud strategies were flagged as potential drags on competition and innovation.
Yet on Tuesday (31 March), the Competition and Markets Authority (CMA) announced a package of actions that largely spared AWS from the harshest designation under the UK’s Digital Markets regime.
While Microsoft faces a new strategic market status (SMS) investigation into its broader business software ecosystem starting in May, AWS avoided further formal scrutiny after committing to enhancements that address customer pain points around choice and flexibility.
In a detailed response published on its UK site, AWS framed the outcome as the result of “productive and transparent” engagement with the CMA, highlighting its ongoing efforts to empower UK customers amid the rapid rise of AI-driven workloads.
A new UK Addendum for customer choice
Central to AWS’s pushback is the launch of a UK Addendum – a formal commitment that codifies rights around multicloud adoption, data portability, and switching processes.
The company says this builds directly on feedback from the CMA’s review and UK customers.
Key elements include:
- Easier multicloud data transfers: AWS Interconnect, announced in November 2025, enables dedicated private connections between cloud providers at a flat price with no data transfer (egress) fees and a free tier upon general availability. It launches first in the London Region, with plans for broader expansion and new partnerships.
- Simplified identity management: AWS IAM Outbound Identity Federation allows customers to use tokens to connect AWS identities to external services, reducing credential hassles in multicloud setups.
- Enhanced multicloud security: Upcoming updates to AWS Security Hub will unify security signals across environments via a common data layer, with more multicloud management tools slated for 2026.
- Support for open AI standards: AWS has backed protocols like the Model Context Protocol (MCP), joining its steering committee, and the Agent-to-Agent (A2A) protocol for secure, standardised communication across systems and AI agents. It also open-sourced Strands Agents, an SDK that simplifies multi-agent orchestration.
These moves aim to lower both financial and technical barriers, aligning with CMA concerns about egress fees and interoperability that can lock customers into a single provider.
Broader commitments
Beyond the Addendum, AWS pledged continued structured engagement with the CMA.
This includes regular reporting on technological trends, customer adoption of switching and multicloud features, responses to feature requests, and collaboration on any remaining technical obstacles identified through customer input.
The company also committed to monitoring international regulatory developments, such as European Commission work on cloud interoperability standards, and adapting them for UK benefit where appropriate.
“We embraced that path, leading to an additional period of close engagement that has been both productive and transparent,” said Andrew DeVore, AWS Vice President and Associate General Counsel.
He noted that AWS had expressed disappointment at the initial recommendation for SMS designation but welcomed the CMA’s deeper dive into AI’s transformative role and customer perspectives.
Investing in the UK economy
AWS’s defence isn’t limited to policy tweaks. The company has long positioned itself as a major economic contributor to the UK, powering everything from startups to government services and AI development.
UK customers spent billions on cloud services in recent years, with the market growing nearly 30% annually as organisations shift from on-premises IT.
AWS data centres require significant local talent in engineering, operations, and facilities, supporting high-skilled jobs amid the AI boom.
AI is accelerating cloud demand, and AWS argues that vibrant competition and open standards will best serve UK businesses looking to innovate without being hindered by switching costs.
The CMA’s latest moves signal that voluntary commitments and rapid industry evolution, particularly around AI interoperability, can influence regulatory outcomes. Google Cloud, the distant third player, has grown faster in some recent quarters, highlighting the market’s dynamism.
For AWS, the strategy appears to be a winning one. Compete aggressively on innovation and customer tools while engaging regulators constructively to demonstrate that the cloud market is delivering “good outcomes” for UK businesses.
“Our focus remains unchanged: empowering choice, fostering flexibility, and competing vigorously to earn customer trust every single day,” DeVore said.
