Summary
- The CMA's 16 October update records progress on interconnection, switching charges, interoperability requests and migration tools.
- AWS and Microsoft have agreed to further work on cross-cloud identity management and portable infrastructure architectures.
- A separate proposed strategic market status designation concerns Microsoft's business software ecosystem, not a completed cloud market designation.
The UK’s Competition and Markets Authority says Amazon Web Services and Microsoft have made progress in reducing barriers to switching cloud providers, but further changes are needed to support customers operating infrastructure across different platforms.
In an update published on 16 October, the regulator identified developments involving cloud interconnection, data transfer charges, interoperability requests and tools intended to simplify workload migration.
Both providers have also agreed to concentrate on improving cross-cloud identity and access management and making portable cloud architectures easier to deploy and migrate between services.
The update follows the CMA’s March 2026 decision to engage with cloud providers outside a formal strategic market status investigation. The regulator continues to monitor progress and has not ruled out opening such an investigation if further action proves necessary.
It published the cloud update alongside a separate proposed decision to designate Microsoft with strategic market status in its business software ecosystem. That proposal remains subject to consultation and does not constitute a designation of Microsoft’s cloud business.
Changes to cloud connections and transfer costs
The CMA reports that AWS and Microsoft have taken steps to connect their data centre infrastructure with competing providers, beginning with Google.
Interconnection can influence how customers move information between services and how applications distributed across multiple providers communicate. Its practical benefits depend on the available network routes, commercial arrangements and technical configuration.
The regulator’s statement does not establish that new data centre buildings have been commissioned. Connecting existing cloud infrastructure is a different development from installing additional computing or electrical capacity.
Data transfer charges form another part of the regulator’s assessment. AWS and Microsoft have removed fees for customers changing cloud provider completely and reduced charges associated with customers using multiple cloud platforms.
The published update does not mean that all network traffic, storage access and other cloud services have become free of charge. The scope of the changes depends on the circumstances covered by the providers’ revised charging arrangements.
Reducing these fees can improve the commercial case for migration. Large datasets may be expensive to move, and the costs associated with extracting information from an existing provider can influence a customer’s choice even when an alternative service offers more suitable computing resources.
Pricing is not the only constraint. Applications may depend on technical services that are implemented differently across cloud platforms, requiring changes to their configuration, security arrangements or supporting systems.
The CMA reports that both companies have introduced mechanisms allowing competitors and customers to request improvements to interoperability. These arrangements provide a formal route for raising compatibility problems, although they do not guarantee that every requested change will be implemented.
Both providers have also begun deploying AI tools intended to automate technical steps involved in migration. The announcement does not establish that these tools can independently transfer every workload or eliminate the need for specialist engineering.
Identity management remains a priority
Identity and access management systems control how users, applications and services obtain permission to access computing resources.
Moving an application between providers can involve changes to authentication, credentials, permissions and integration with supporting services. Those dependencies may persist even after the underlying data has been transferred.
The CMA has consequently agreed with AWS and Microsoft that further work should address identity management across clouds. It also wants customers to be able to deploy and migrate architectures designed for portability without unnecessary technical restrictions.
A portable architecture reduces dependence on a particular provider’s implementation, but it does not necessarily mean every component can be transferred without reconfiguration. Network connectivity, storage compatibility and security controls must still be assessed against the requirements of the destination environment.
The regulator is seeking practical improvements through continued engagement with both providers. Its approach is distinct from imposing a completed set of statutory cloud remedies following a formal strategic market status designation.
The CMA plans another update in spring 2027. That publication will provide a further opportunity to examine whether the measures are delivering improved switching and interoperability for UK customers.
Microsoft’s software investigation is separate
The regulator’s other announcement on 16 October concerns Microsoft’s position across five categories of business software: personal computer operating systems, productivity suites, security software, server operating systems and relational database management systems.
The CMA has provisionally concluded that Microsoft has a strong position across these activities and is consulting on whether the company should receive strategic market status for its business software ecosystem.
Potential areas for further examination include bundling arrangements, software integration, competition involving AI tools and the effect of Microsoft’s licensing practices on customers choosing where to run software.
Cloud infrastructure intersects with that investigation because software licensing conditions can influence which provider a customer selects. However, the overlap does not turn the proposed business software designation into a final regulatory decision about AWS or Microsoft Azure.
The proposed designation is not a finding of wrongdoing. Any subsequent intervention would require the CMA to follow the applicable legal process and satisfy the relevant statutory requirements.
The regulator’s statutory deadline for reaching its business software designation decision is February 2027. That timetable is separate from the spring 2027 update on progress in cloud services.
The two regulatory processes leave different questions outstanding. In cloud infrastructure, the regulator is examining whether voluntary changes sufficiently reduce migration and interoperability barriers. In business software, it is consulting on a formal designation that could provide a basis for future competition measures.
Customers operating applications across multiple cloud platforms will therefore need to distinguish improvements already introduced from further technical changes still under discussion.
