In a move that builds upon the sentiment that hyperscale cloud providers need to embrace multicloud,  communications regulator Ofcom officially passed on its investigation of the U.K. public cloud market to that country's Competition and Markets Authority (CMA). The move could also open up the global cloud market to competition-related scrutiny.

The Ofcom examination fell under the Enterprise Act 2002, and was part of a program to ensure digital communications markets work well for both people and businesses in the U.K. When markets don’t work well, businesses and customers experience negative impacts like higher prices, lower service quality and stunted innovation.

With the investigation in CMA's hands, the organization will conduct its own independent look at whether or not competition is being negatively impacted by the substantial prowess of a few cloud service providers – namely, Amazon Web Services (AWS) and Microsoft Azure. Following CMA's investigation, it will either take action or recommend others to take action to reestablish healthy competition in the market.

Referring this issue to the CMA “is a significant step for Ofcom to take,” according to the regulator, and it demonstrates the importance of the cloud computing market in the eyes of U.K. consumers and businesses.

According to Forrester Principal Analyst Tracy Woo, the move also serves as evidence for the growing sentiment that users want hyperscale cloud providers to be more open, more transparent and willing to adapt to the multicloud mindset. Simplifying the complexity of the multicloud environments in which many organizations accidentally find themselves shouldn't be left to third-party vendors. That's “actually the responsibility of the public cloud providers,” Woo told SDxCentral.

But that idea is a “widely known secret,” and “no one has really done much to – or has been able to – enforce it really well,” despite the general desire to “nail these major tech providers on their anticompetitive practices,” she said.

To that point, the U.K.'s ongoing investigation is “just one more thing piling up against the cloud providers in terms of having them be less competitive with each other,” she said. “This a sign of a growing momentum of folks that want more openness between the cloud providers.”

The investigation isn't likely to make a significant dent in terms of cloud spending or the relationships between hyperscalers.

Ofcom's investigation uncovered notable concerns about the country's cloud infrastructure market, which is dominated by AWS and Microsoft. Ofcom's investigation identified that egress fees, technical barriers to interoperability and committed spend discounts are the features of the market warranting the most concern.

In its examination of the cloud infrastructure market, which included infrastructure-as-a-service (IaaS), platform-as-a-serivce (PaaS) and software-as-a-serivce (SaaS), Ofcom determined AWS and Microsoft are the two major players with a combined market share of 70%-80%. Google is the closest runner up, trailing behind with 5%-10% of the market.

And impressive profit margins for the two market leaders show “there are limits to the overall level of competition,” according to Ofcom.

Among the major players, Ofcom found egress fees, or charges paid by customers to move their data out of the cloud, are significantly higher than at smaller cloud providers. These high costs can discourage hyperscale customers from adopting a multicloud model and ultimately work to prevent customers from switching to a different cloud provider altogether.

In addition, hyperscale customers tend to experience technical barriers to both interoperability and portability. That means customers must reconfigure their applications and data for compatibility with different cloud environments. “This makes it more difficult to combine different services across cloud providers or to change provider,” regulators said.

And while committed-spend discounts are great for reducing existing customers' costs, “the way these discounts are structured can incentivize customers to use a single hyperscaler for all or most of their cloud needs, even when better-quality alternatives are available,” they said.

Based on these common strategies to retain customers, regulators are concerned that the difficulty of switching and using various cloud providers will make it harder for smaller competitors to grow and meaningfully challenge AWS or Microsoft.