UK Firms ‘Abandoning Single Cloud’ as CMA Scrutiny Mounts

Sixty percent of UK organisations no longer rely on a single cloud provider, according to new research from cloud provider Civo, as the Competition and Markets Authority prepares its final decision on whether market concentration is harming competition in the £9bn sector.

The research, based on a survey of over 1,000 UK IT leaders, shows 78% now prioritise sovereignty when selecting technology partners.

The CMA’s provisional findings, published in January, identified competition concerns in a market where AWS and Microsoft each control 30-40% of customer spend. Google holds a much smaller share, leaving two US technology companies dominating the sector that underpins most UK business operations.

CMA investigation highlights market concentration concerns

The CMA investigation began following a reference from Ofcom in October 2023 and has examined egress fees, technical barriers and committed spend discounts. The CMA has provisionally found that egress fees and technical barriers constitute features which harm competition in the markets, whilst committed spend discounts do not currently harm competition as rivals can profitably compete against them.

Technical and commercial barriers can make it harder for cloud customers to switch and multi-cloud between providers, locking them into their initial choice of provider which may not reflect their evolving needs, the regulator found.

Civo’s research identifies two primary approaches to diversification among UK organisations. Some 29% are pursuing multicloud strategies, whilst 31% are adopting hybrid cloud models that blend public cloud with on-premises infrastructure.

However, implementation challenges persist. Only 35% of organisations report having full visibility into where their data is stored and governed, undermining sovereignty objectives.

“I speak to founders and IT leaders all the time who tell me the same thing: they know they need to move away from relying on a single provider, but they feel stuck,” says Mark Boost, CEO of Civo. “Between licensing restrictions, integration hurdles and long-standing vendor lock-in, it's just not as easy as flipping a switch.”

Microsoft licensing practices under regulatory scrutiny

The CMA has focused particular attention on Microsoft’s software licensing practices. It provisionally found that Microsoft is using its strength in software to make it harder for AWS and Google to compete effectively for customers who wish to use Microsoft software on the cloud.

The CMA determined that deploying Windows Server and SQL Server on Google Cloud and AWS is often more expensive than running them on Azure. The price that Microsoft charges rivals for some products can be higher than the retail price it charges its own customers, it said.

Microsoft has disputed these characterisations, stating in its response that “Amazon and Google appear from all accounts likely to have ample margin to play with and compete profitably”. The company pointed to the $50bn and $30bn capex investments by Amazon and Google respectively as evidence of their competitive strength.

AWS has countered that “one exception to the well-functioning nature of the market for IT services is Microsoft’s licensing practices”, whilst Google stated that “Microsoft’s licensing practices both raise rivals’ costs and weaken rivals’ ability to compete for a significant proportion of customer demand”.

Microsoft's deputy general counsel for competition, Rima Alaily, responded that "the draft report should be focused on paving the way for the UK's AI-powered future, not fixating on legacy products launched in the last century".

Digital Markets Act powers may target dominant providers

The inquiry group provisionally recommends that the CMA board considers investigating AWS and Microsoft's cloud service activities using new digital markets powers under the Digital Markets, Competition and Consumers Act, which came into force on 1 January 2025.

Strategic market status designation would allow the CMA to impose legally binding conduct requirements on designated firms. The CMA can fine companies with strategic market status up to 10% of their annual worldwide revenue for antitrust violations.

AWS has described the proposed intervention as "not warranted", stating that “the evidence demonstrates the IT services industry is highly competitive”. An AWS spokesperson said the company would “continue to work constructively with the CMA as they work on their final report”.

Hybrid cloud gaining traction

The research indicates that hybrid cloud models may address some multicloud complexity issues. By combining public cloud scalability with private infrastructure control, hybrid approaches allow organisations to balance agility with oversight requirements.

Multicloud strategies can result in fragmented support models, inconsistent compliance requirements, and proprietary tooling that increases rather than reduces operational complexity. This creates disconnected ecosystems that strain IT resources and elevate governance risks.

Mark continues: “What we’re seeing now is a real shift in how organisations think about infrastructure. It’s not just a technical decision anymore. They want control and the ability to stay resilient in the face of geopolitical uncertainty – that starts with sovereignty.”

The data indicates organisations are evaluating infrastructure decisions through operational resilience, regulatory compliance and long-term sustainability considerations rather than purely technical capabilities or cost metrics.

“Multi and hybrid cloud are part of that response, but in many cases, the ecosystem hasn't caught up to the need,” Mark says.

“What’s becoming increasingly clear is that hybrid cloud offers a more practical path forward. It gives businesses the flexibility they’re looking for, without the operational complexity and fragmentation that often come with multicloud. But to fully realise the benefits of hybrid cloud, businesses need platforms that are open by design, interoperable and built with transparency at their core.”