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The UK cloud industry is in a state of conflict over competition concerns, according to a review from the CMA, particularly regarding the principles of software licensing and egress fees.
The CMA’s review revealed that long-term customers largely lack concern over these issues despite accepting that they may impede their decision to change cloud providers.
With regard to software licensing, for example, Microsoft customers participating in the review stated that they did not “generally” consider software licensing principles to have affected their decision to go with Azure.
At the same time, however, they expressed a “clear general desire” to keep everything in their organization within a Microsoft ecosystem.
“We were largely a Microsoft shop, so that turned us down the Microsoft journey in terms of the early explorations … It snowballed on its own in a way, because it just made it easier to leverage the capability and the platform that a company like ourselves had invested in,” one customer said.
“Then you’re tied into the software agreements. You’re then tied into platforms that are built that consume those software agreements. Then there’s a natural and an easier journey to migrate from there into the Azure cloud versus switching over to something else.” they added.
Another customer stated that Microsoft made it “cheaper” to use certain services on Microsoft’s cloud than if a customer decided to “use it in somebody else’s cloud”.
This is, in many ways, the crux of the software licensing issue, and critics have publicly expressed concern over the extent to which software licensing artificially inflates costs and prevents competition in the cloud market.
Critics have taken shots at Microsoft over this issue, with Google addressing a letter to the CMA on the topic before AWS pitched in later toward the end of last year.
According to the CMA’s review, businesses do understand this connection; they’re just not concerned by it or worried about the extent to which it might affect their choice of cloud provider.
“Despite the clear connection between widespread Microsoft usage within an organization and the decision to choose Azure as their public cloud provider, participants generally do not see a direct causal link between their organization’s decision to choose Microsoft for its software needs … and its decision to choose Azure,” the review stated.
At the same time, it stated the participant’s recognition that “it would be very difficult to unpick their organization’s reliance on Microsoft from their present-day situation”.
In another conflicting conclusion, the review asserted that there was “very little appetite” among Azure users to review their reliance on Microsoft despite an understanding that there were “technical and financial structures inherent in Azure that make the idea of reviewing Azure usage unattractive from a business cost/benefit analysis point of view”.
Businesses are willing to put up with egress fees
The CMA’s review revealed that though UK businesses do not necessarily relish the idea of paying egress fees, they consider them a necessary or inevitable part of their cloud operations.
“Attitudes among participants towards egress fees ranged from a ‘necessary evil’ to a ‘cost of doing business’. Few participants considered egress fees to be an unfair practice,” the review said.
Participants who had switched or who had pursued multi-cloud strategies considered egress fees “a price worth paying to deliver the cloud strategy that makes most sense for their business.”
Though there is a less evident sense of conflict here, Mark Boost, CEO of UK-based cloud provider CIVO, told ITPro that this perspective on egress fees is a particularly damning condemnation of the UK cloud market.
“In my eyes, the cloud industry is broken if businesses consider high egress fees ‘a price worth paying’ if they want to achieve their cloud strategy,” Boost said.
“This shouldn’t be an accepted status quo in the cloud space, and it definitely shouldn’t be an accepted way to reach a strategy ‘that makes most sense for their business’,” he added.
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