Antitrust scrutiny under the European Union’s new Digital Markets Act is causing concern among U.S.-based cloud services providers. Cost-savings for clients who bundle services are not unusual in the cloud sector, and while some clients prefer using multiple cloud vendors, others want to take advantage of discounts. As enterprise continues to shift operations to the cloud, packages from Google Cloud Platform, Amazon Web Services and Microsoft Cloud find themselves subject to criticism in what some say is nothing less than a regulatory assault on vertical integration.
Approved by EU lawmakers last week, the DMA aims to prevent Big Tech from using market dominance to gain favor for their own tools and services. The U.S. Congress has proposed bills that bar tech giants from unfairly leveraging their size against competitors, but none has moved at the pace set by the EU.
As a first-mover, it is being viewed as something of a bellwether, though The Wall Street Journal writes that the EU’s hard line may “lead to different product sets for enterprise customers in the European market,” resulting in higher costs there that “are likely to be passed along to customers.”
“This means that CIOs may not have to change much of their practices in the long term,”said Infosys Consulting partner Elizabeth Ebert tells WSJ, predicting the new rules to lead to legal battles with uncertain outcomes. “Preventing large tech firms from giving preferential treatment on their platforms to their own software apps removes ‘one of the main benefits of launching a tech platform,’” WSJ writes, quoting Ebert.
Reports say Microsoft has drawn particular attention from European regulators due to widespread use of its Windows OS and Office productivity apps. A separate piece in The Wall Street Journal says Microsoft president Brad Smith is proactively “attempting to listen to and address issues European companies are worried about” rather than waiting for court- ordered resolutions.
In April, Microsoft reps met in Paris with members of Cigref, an EU tech policy group that wants to make it easier for corporate and government customers to switch cloud providers. It is too early to tell if such effort will bear fruit. WSJ cites Stifel Financial’s estimate that roughly 35 percent of Microsoft sales revenue is generated “from the European region,” translating to about $60 billion for the company’s last reported fiscal year.
Oracle is also moving preemptively. On Monday, the company introduced Oracle Cloud Infrastructure’s “sovereign cloud regions,” which let private companies and public sector organizations across the EU use OCI sovereign cloud regions “to host data and applications that are sensitive, regulated, or of strategic regional importance.”
TechRadar writes that the new sovereign clouds restrict operations and customer support responsibilities to EU residents, “which could help customers to demonstrate alignment with relevant EU regulations and guidance.”