AWS says half of Microsoft Azure customers would shift…

AWS says half of Microsoft Azure customers would shift to them if not for licensing costs

AWS, Microsoft and Google testify at UK CMA investigation
Microsoft’s licensing terms and fees appear to be a problem
Google denies dominance, says it’s a challenger

Ever since the UK’s Competition & Markets Authority has been investigating the health of the UK cloud market, the hyperscalers in question have been battling it out against each other by submitting little digs in official documentation meant to act in their defense.

This time, AWS is slamming Microsoft for its unfavorable licensing terms, which are preventing customers from being able to use alternative cloud storage providers without excessive fees.

“Perhaps 50% of those workloads currently running on Azure would move elsewhere if it was economically feasible,” AWS told the CMA.

AWS criticizes Microsoft’s licensing terms and high fees

Microsoft’s 2019 changes increased the costs relating to running Windows Server on non-Azure cloud (such as AWS, Google Cloud and Alibaba Cloud), making it up to four times more expensive for customers.

Those fees aren’t just affecting customer, either. “AWS said that it has to offset the additional costs imposed by Microsoft’s licensing restrictions including on the cost of licences that need to be repurchased and the additional monetary impact of non-pricing features,” the CMA hearing summary continues, but “it cannot offset all those costs in a profitable way.”

Google also agreed with AWS’ comments in a separate hearing summary, providing an example where a customer chose Azure solely for licensing/commercial reasons despite having an actual preference for Google Cloud.

However, Google might not be entirely on Amazon’s side. The company described itself as a “challenger cloud provider and a distant third in size to the two market leaders, AWS and Microsoft.” Still, Google is worried that Microsoft could dominate the UK cloud market in as little as five years “if nothing change[s].”

Defending its position, Microsoft argued that egress fees are not a major concern for customers, adding that even after removing the fees under the EU Data Act, switching remained low.

The outcome of the investigation is anyone’s guess, but the market dominance is clear.

When Ofcom first submitted its complaint to the CMA in October 2023, it noted in a report that Microsoft and Amazon accounted for 70-80% of the UK’s cloud market in 2022, estimated to be worth £7 to £7.5 billion. Google, in third place, only accounted for 5-10%.