Shares of cloud computing giants, Amazon (AMZN) and Microsoft (MSFT) ticked lower in pre-market trading on Wednesday as these companies could face an antitrust investigation in the U.K. after Ofcom, the communications regulator said some aspects of the cloud computing market were a matter of concern.
Amazon and Microsoft have a combined market share in the range of 60% to 70% of the cloud computing market while Google (GOOGL) has a market share between 5% and 10%.
Ofcom pointed out that besides high switching costs, technical restrictions and discounts that encouraged customers to stick to a single provider even if better quality alternatives were available could all be considered anti-competitive.
The regulator stated, “High levels of profitability for AWS, and substantial consistent growth in Microsoft’s profits, indicate there are limits to overall competition. We are concerned that constraints on customers’ ability to use more than one provider could make it harder for smaller cloud providers to win business and compete with the market leaders.”
The Technology Select Sector SPDR Fund (XLK) has soared by more than 22% in the past three months.
