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At the end of July 2025, the CMA released a report that shook the tech world. The watchdog expressed serious concerns about the way the cloud market functions and openly called for considering whether Microsoft and AWS should be given Strategic Market Status (SMS).

This label – similar to the EU’s “gatekeeper” designation under the Digital Markets Act (DMA) – would allow the CMA to impose special obligations on the companies to restore fair competition. It’s not just a warning shot at Big Tech, but also a possible sign of sweeping regulatory changes in the cloud sector.

Who really owns the data?

The CMA identified market concentration as a structural problem. In the UK, Microsoft controls between 30–40% of the Infrastructure-as-a-Service (IaaS) market, while AWS holds 20–30%. In the Platform-as-a-Service (PaaS) segment, Amazon commands 10–20%.

This duopoly, according to the report, gives the two companies real power over competition, innovation, and availability of cloud services. Without effective checks, the CMA warns, customers face less choice and the market risks being distorted.

While the report didn’t recommend specific laws, it clearly pointed to the need for a formal investigation into giving both Microsoft and AWS SMS status.

Where is Europe?

Comparing UK’s proactive stance to EU’s silence, it looks like the UK is leading where the EU is hesitating. Despite having tools under the DMA, the EU has so far avoided designating Microsoft, AWS, or even Google Cloud as gatekeepers.

For many observers, this raises doubts about the EU’s digital regulation agenda. Frustration is growing among politicians and stakeholders in Brussels. The UK’s move might pressure the EU to act – or highlight even more clearly its lack of boldness.

Big tech fights back

Microsoft and AWS quickly defended themselves after the CMA report. An AWS spokesperson accused the regulator of ignoring “clear evidence of strong competition” in the UK’s IT sector. Microsoft, meanwhile, argued that the CMA unfairly focused on just two players while leaving out Google, which they claim is rapidly growing.

But the numbers tell a different story: according to the CMA’s data, Google only has 5–10% of the market. That’s far below the levels of concentration seen with Microsoft and AWS – and explains why Google isn’t included in this case. The bigger question is whether pointing at “emerging competitors” is simply a distraction from the real problem: the dominance of a duopoly.

The innovation dilemma

The CMA’s concerns aren’t just about market share. They’re about the long-term impact of concentrated digital infrastructure. In today’s world, cloud access is essential for modern business. Relying on just two major providers doesn’t just risk monopolisation – it also makes life harder for smaller firms and startups.

How can a young, innovative company compete with tech giants that don’t just offer cloud services, but entire ecosystems of software, operating systems, and databases? Is the market rewarding innovation, or simply size and vertical integration?

Will new rules work?

Under UK law, giving SMS status would allow the CMA to use a wide range of tools – from forcing interoperability to banning certain forms of service bundling. But whether these rules actually work will depend on how determined the regulator is, and whether it can enforce them against global tech giants.

There’s also a bigger problem: if only the UK takes this path, and other jurisdictions don’t follow, the world could end up with regulatory “islands” – some regions protecting competition, while others let Big Tech dominate. That could create risks of technological fragmentation.

A geopolitical game

The concentration of the cloud market isn’t just economic – it’s geopolitical. Whoever controls user data, computing infrastructure, and access to AI resources also holds power that extends to national security. For Europe, this means not just economic dependence, but political dependence on US-based corporations.

So the question remains: will the CMA really take bold action and challenge this imbalance? Or will this go the way of many past regulatory efforts – stopping at strong words and long reports?

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