The European Commission has preliminarily determined that the cloud computing divisions of the US tech companies Amazon and Microsoft should be considered gatekeepers, meaning entities capable, by virtue of their size, of controlling access to digital markets and the conditions of use of services.
THE EUROPEAN COMMISSION’S OBJECTIVE: TO TAME THE AMERICAN BIG TECH TO ACHIEVE “TECHNOLOGICAL SOVEREIGNTY”
Amazon Web Services is, in fact, the largest provider of cloud computing services worldwide, followed by Microsoft’s Azure and Alphabet’s Google Cloud. The designation of Amazon Web Services and Microsoft Azure as gatekeepers – arrived after seven months of investigations by European authorities – entails a series of obligations and prohibitions for the two companies, for example regarding the interoperability of their services and data portability.
Essentially, the Commission aims to reduce the market power of American Big Tech in order to protect European “technological sovereignty”; the tool intended to achieve this goal is the Digital Markets Act, the law promoting competition in digital markets that came into force in 2022.
THE IMPORTANCE OF CLOUD COMPUTING
In this regard, the extension of the Digital Markets Act to the cloud computing sector is significant, because until now the law had been applied to other areas, such as online search, social networks, and platforms for purchasing applications (app stores, in jargon). However, cloud computing is a more “critical” sector because it is directly linked to artificial intelligence, a technology with high transformative potential for the economy.
“Cloud services have become a pillar of the European economy, as well as a fundamental prerequisite for artificial intelligence, with over half of the Union’s companies using them today,” said Henna Virkkunen, Vice-President of the European Commission for Technological Sovereignty. “Given their central role in Europe’s digital future,” she added, “these services must operate in fair, open, and competitive markets, capable of promoting trust and ensuring the block’s technological sovereignty.”
RESPONSES FROM AMAZON AND MICROSOFT
Amazon responded to the Commission’s decision by arguing that Brussels’ assessment does not take into account the breadth of cloud services available to European customers and therefore risks discouraging investment and innovation on the continent, which also lacks comparable own alternatives to those offered by American Big Tech.
An Amazon Web Services spokesperson added that the Union “already has comprehensive cloud legislation thanks to the Data Act. Adding an additional and heavy overlapping layer of regulation under the Digital Markets Act undermines European competitiveness and access to cutting-edge computing technologies.”
Microsoft, on the other hand, wanted to emphasize the “growing power of Google Cloud” and the Gemini artificial intelligence assistant, which could “harmfully distort the market.”
WHAT THE COMMISSION DETERMINED
However, the Commission determined that Amazon and Microsoft “appear to occupy a strong and lasting position in the Union’s cloud computing sector.” Their services “have recorded significant revenue, and their operational capacity and investments appear to have far exceeded those of competitors. Both companies boast a broad and established user base and seem to benefit from lock-in effects and high switching costs to another provider.”
