EC decides: Amazon and Microsoft Clouds are regulated by European law

ANDm reported, the European Commission states that, on the basis of a preliminary assessment, it informed Amazon and Microsoft that its cloud computing services, Amazon Web Services and Microsoft Azure, should be considered ‘gatekeepers’ under the Digital Markets Act (DMA).

Digital platforms that have a turnover or market value in the European Union (EU) of at least EUR 7.5 billion, operate in at least three Member States and have more than 45 million users active monthly, are designated as ‘gatekeepers’.

While recognising that Amazon Web Services and Microsoft Azure have not reached these levels, the European Commission notes that they are the “first and second largest cloud computing services in the EU” and represent an “important intermediary between companies and consumers” in the block.

Amazon and Microsoft seem to occupy a consolidated and lasting position in the EU cloud computing sector, as demonstrated by Amazon Web Services and Azure’s leadership position over several years,” he says.

The Community executive also notes that the two services “reached significant business volumes and their operational capacity and investments seem to have significantly exceeded those of competitors”.

“ Both have large and consolidated user bases, which seem to benefit from loyalty effects and high service change costs, in addition to having a large ecosystem,” the European Commission adds.

The European Commission notes that, under the DMA, it may decide to designate ‘gatekeepers’ companies that do not meet the thresholds laid down in the law, on the basis of their impact on the internal market, importance as an intermediary between businesses and consumers and ‘consolidated or lasting position on a market’.

This decision is preliminary, and Amazon and Microsoft may now appeal. If the European Commission subsequently confirms this decision, Amazon and Microsoft will have six months to ensure that their cloud computing services comply with digital market law.

Cited in this statement, Vice-President Teresa Ribera states that Europe is becoming “more and more dependent on cloud computing services”, which is why it is necessary to ensure that “the market remains competitive, functional and balanced for all” stakeholders.

“This will contribute to ensuring access to secure, sustainable and interoperable cloud computing services in Europe,” he said.

In force in the EU since November 2022, the Digital Markets Act lays down rules on what technology companies with gatekeeper status are or are not allowed to do in the EU, a kind of blacklist with rules for these large platforms.

The rules aim at fair markets in the digital sector by then regulating the activity of ‘gatekeepers’, which are large digital platforms that constitute a gateway between business users and consumers, whose position can cause barriers.