EU launches bold investigations into Amazon and Microsoft cloud services amid regulation push

The European Commission has initiated major probes into Amazon Web Services and Microsoft Azure, signalling a new phase of regulation aimed at critical cloud providers despite current thresholds. The investigations could reshape Europe’s cloud infrastructure and set global precedents for digital sovereignty and competition.

The European Commission has initiated three distinct investigations into Amazon and Microsoft to determine whether their cloud computing services, Amazon Web Services (AWS) and Microsoft Azure, should face stricter regulation under the European Union’s Digital Markets Act (DMA). This move marks a significant development in the EU’s ongoing efforts to regulate major digital platforms beyond traditional thresholds of market size and user numbers.

The DMA typically designates companies as “gatekeepers” based on criteria including having over 45 million monthly active users and a market capitalisation exceeding 75 billion euros. However, AWS and Azure currently do not meet these quantitative thresholds. Despite this, the European Commission is examining whether these cloud platforms function as critical intermediaries between businesses and customers, effectively acting as dominant gateways in Europe’s cloud market. This approach reflects the Commission’s broader intent to ensure the DMA remains responsive to fast-evolving practices within strategic sectors such as cloud computing.

If the Commission ultimately classifies AWS and Azure as gatekeepers, both services would consequently be subject to additional obligations under the DMA. These duties could include interoperability requirements, forbidding preferential treatment of their own products, and mandates to open their systems to third-party services. This would extend the regulatory scrutiny already imposed on other Microsoft and Amazon services such as LinkedIn, Windows PC operating systems, Amazon Marketplace, and Amazon Advertising. The EU aims to conclude these inquiries within 12 months, with companies given six months to comply if designated gatekeepers. Meanwhile, a broader probe is assessing whether the current DMA framework adequately addresses competition challenges in the cloud sector, a review expected to complete within 18 months and potentially lead to updates in the legislation.

The EU’s investigations come amid growing concerns about the central role of cloud services in Europe’s digital infrastructure and strategic autonomy. Cloud computing is viewed as critical for innovation and the development of artificial intelligence technologies, heightening the stakes of regulatory decisions. For instance, recent disruptions such as a significant AWS outage highlighted vulnerabilities in internet and business operations tied to dominant cloud providers.

Responses from the companies under scrutiny reflect their resistance to increased regulation. An AWS spokesperson asserted confidence that the European Commission would recognise the highly dynamic and competitive nature of the cloud market, warning that imposing gatekeeper status risks stifling innovation and increasing costs for European businesses. Microsoft expressed readiness to cooperate with the investigation. Both companies emphasise the importance of maintaining a regulatory environment conducive to innovation and choice.

The EU’s regulatory stance also intersects with broader industry oversight. Notably, earlier this year, 19 major tech companies, including AWS, Microsoft Azure, and Google Cloud, were designated as “critical” technology providers for the financial industry under the Digital Operational Resilience Act (DORA). This designation places these firms under direct supervision by major EU financial regulators due to their integral role in the sector’s operational stability. It reflects a shared regulatory concern about the increasing reliance on third-party cloud services and the associated risks of systemic outages or geopolitical disruptions.

Beyond the EU, similar concerns about cloud market competition are emerging. The UK’s Competition and Markets Authority (CMA) recently spotlighted Microsoft and Amazon as dominant players in the British cloud computing market, which was valued at £9 billion ($11.18 billion) in 2023. The CMA is considering investigations under its own Digital Markets, Competition, and Consumers Act, citing limited choices for businesses and substantial market shares held by AWS and Microsoft Azure.

These moves underscore a broader trend where regulators seek to assert greater control over dominant tech platforms to safeguard competition, market fairness, and digital sovereignty. However, critics argue these complex regulatory frameworks, especially the DMA, risk unintended consequences. Requirements such as interoperability and alternative ranking or recommendation systems may pressure platforms toward risk-averse moderation policies. While not explicitly targeting free speech, these mandates could inadvertently limit the visibility of controversial viewpoints or homogenise content governance, subtly affecting online expression and political discourse.

The European Commission remains firm on enforcing its digital regulations autonomously, resisting external pressures, most notably from the United States, whose administration has criticised the DMA for disproportionately targeting American tech firms. The EU’s firm stance, as reiterated by Commission spokespersons, indicates that these laws will be rigorously applied to uphold fair competition and digital governance within Europe, regardless of international trade negotiations or bilateral relations.

As these investigations unfold, the outcomes will not only shape the future operational landscape for Amazon and Microsoft in Europe’s cloud market but could also set global precedents for regulating the digital infrastructure that underpins modern economies and societies.

📌 Reference Map:

• ^[1] (ZeroHedge) – Paragraph 1, 2, 3, 4, 5
• ^[3] (AP News) – Paragraph 2, 4
• ^[6] (Brussels Times) – Paragraph 2
• ^[2] (Reuters) – Paragraph 6
• ^[5] (CNBC) – Paragraph 7
• ^[1], ^[4] (ZeroHedge, Reuters) – Paragraph 8, 9

Source: Noah Wire Services