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CMA slammed for excluding public sector from UK cloud market antitrust user research

The Competition and Markets Authority is under fire for instructing the firm overseeing the user research part of its antitrust probe into the UK cloud infrastructure services market not to include public sector buyers

The Competition and Market Authority (CMA) is coming under fire for banning public sector customers from participating in the research phase of its antitrust probe into Amazon Web Services (AWS) and Microsoft.

The UK competition watchdog is in the midst of an 18-month investigation into the UK cloud infrastructure services market, after communications regulator Ofcom raised concerns about the competitive practices of AWS and Microsoft in this sector.

As previously reported by Computer Weekly, the CMA published working papers and a user research report carried out by a company called Jigsaw on 23 May to provide cloud market stakeholders with an insight into how its investigation was progressing.

The report runs to 116 pages and, according to its authors, was compiled to “deepen the CMA’s understanding of UK cloud customers’ decision-making on their choice of public cloud infrastructure services, their multi-cloud and switching behaviour, and future use of these services”.

To achieve this, the CMA asked AWS, Microsoft, Google, IBM and Oracle to provide Jigsaw with the names of “medium-to-large UK public cloud customers” so that it could interview “key decision-makers” within this business to better understand their cloud-buying strategies.

“CMA initially selected approximately 700 companies at random from the sample frame in order to screen and recruit a target of 60 respondents,” the Jigsaw report stated. “This comprised 140 companies chosen at random from each of these providers.

“Some contacts were then excluded by the CMA before recruitment began, as they were already involved in providing information to the CMA as part of the market investigation. The decision was also made by the CMA to exclude public sector organisations.”

Eyebrows raised

The decision has raised eyebrows among UK cloud market stakeholders because of how heavily-used Amazon and Microsoft’s cloud technologies are in the public sector.

Speaking to Computer Weekly, Mark Boost, CEO of UK-based cloud services provider Civo, said the CMA had made a mistake by choosing not to poll public sector cloud users in this research.

“It’s a mistake to cut public sector organisations from this review, especially considering all the investment that the hyperscaler providers currently have in the public sector,” he said.

“There are a lot of valid industry concerns that a monopoly is forming within this space. We’ve previously seen government departments locked away into multiple-year contracts for big tech services, and none of this seems to encourage a competitive playing field.”

Nicky Stewart, former head of ICT at the UK government’s Cabinet Office, told Computer Weekly the CMA’s decision not to allow public sector bodies to participate in its user research does seem odd.

“The public sector is one of the, if not the, largest consumers of public cloud services in the UK,” she said. “It also doesn’t make sense in the context of the CMA’s competitive landscape paper, which makes several points about public sector procurement, including recording stakeholder concerns about public sector procurement practices.”

UK datacentres

The use of AWS and Microsoft’s cloud technologies have grown substantially in the public sector since both firms opened their first UK datacentre regions in late 2016.

Shortly afterwards, in January 2017, the UK government announced its long-standing central government-focused, cloud-first mandate would be tweaked so the policy would become a “public cloud first” edict.

In the wake of these developments, the amount of UK government IT spend directed towards Microsoft and Amazon soared, buoyed further by the roll-out of preferential pricing agreements that allow public sector IT buyers to benefit from discounted pricing on both firms’ cloud products and services.

The CMA is among the public sector bodies that have participated in the AWS preferential pricing discount scheme and benefited from committed spend discounts on Amazon cloud services.

Incidentally, the use of committed spend discount schemes and the impact it has on competition in the UK cloud market is an area of focus for the CMA’s antitrust probe.

The situation has led to conflict of interest concerns being directed at the CMA, despite assurances that the teams responsible for procuring services for the authority and those tasked with overseeing its an investigatory work are separate.

These conflict of interest concerns were reignited earlier this month, after it emerged the CMA had signed a new contract with AWS that would see it double its spend with Amazon over the next three years and continue to benefit from discounted pricing on its services.

Computer Weekly contacted the CMA for clarification on its decision to exclude public sector organisations from its user research, but the authority declined to provide an on-the-record response. 

The CMA has previously gone on record to say it will be publishing additional working papers and user research over the coming months, in addition to the first tranche it dropped on 23 May, and has also committed to publishing a “provisional decision” that is expected to give a steer on what the final outcome of its investigation into the competitiveness of the UK cloud market will be.

Read more about the CMA investigation into the UK cloud market

Computer Weekly understands the authority is gathering evidence from public sector bodies in other ways to inform its investigation, rather than rely on commissioned research, but no further details on the methods they are using have been revealed at this time.

It’s understood that the public sector’s input on the study could be published in the Autumn, as part of a package of materials that support the CMA’s provisional judgement.

As things stand, though, Owen Sayers, an independent security architect and data protection specialist who works principally in the law enforcement portion of the public sector, has said the scope of the CMA’s cloud market review looks “terrifically small”.

This is on the basis that it has followed Ofcom’s earlier stance on ruling the software-as-a-service suppliers and users as out of the scope of its investigation.

Furthermore, the Jigsaw research also excludes any business from participating that says they use public cloud for more than 50% of their activities that concern servicing customers.

“This will rule out huge swathes of SME [small and medium-sized enterprises] and other UK-based service providers who have elected to use these platforms as a [means] of meeting their customer requirements,” said Sayers.
“As things stand, it looks as though the CMA are specifically looking at cloud use by private sector companies and organisations who use it to replace their in-house IT, and who may peripherally also use it for servicing of customers – but only if this is less than their own internal IT use.”

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