LEGAL

Preliminary position calls for designation under the Digital Markets Act

The European Commission has reached the preliminary position that Azure and AWS should be designated as gatekeepers under the Digital Markets Act (DMA).

The gatekeeper designation would mean requirements imposed on the cloud giants, with fines of up to 10 percent of worldwide turnover if those requirements are not met.

According to the Commission, AWS and Azure, "the largest and second largest cloud computing services in the EU respectively," are a gateway between businesses and their customers in the bloc.

"They both have vast and entrenched user bases and appear to benefit from lock-in effects and high switching costs, in addition to a large ecosystem."

Although the cloud giants did not meet the DMA's quantitative thresholds for designation (such as user numbers), their market positions have attracted scrutiny. Should the gatekeeper designations stick, obligations regarding interoperability, access to data, and competition would apply.

The view is preliminary at this stage, and Amazon and Microsoft have the opportunity to respond before anything becomes final.

A Microsoft spokesperson told The Register: "We continue to engage constructively with the Commission. The cloud sector in Europe is innovative, highly competitive and an accelerator for growth across the economy."

The spokesperson added: "We remain concerned that ignoring the growing power of Google Cloud and Gemini will tilt the market in a harmful way."

AWS also disagreed with the Commission's preliminary position. A spokesperson told The Register: "The Commission's preliminary findings disregard the breadth of cloud services available to European customers and risk deterring European investment and innovation. AWS faces healthy competition and customers across Europe have more choice, lower prices, and greater flexibility than ever before.

"The EU already has comprehensive cloud regulation through the Data Act, and adding another heavy layer of overlapping regulation under the DMA undermines European competitiveness and access to cutting-edge information technology. We will continue to engage with the Commission to reach the right outcome for customers and Europe's digital future."

Other parties responded more positively. A spokesperson for the Open Cloud Coalition told The Register: "Our members welcome the Commission's preliminary finding naming Microsoft and AWS as cloud gatekeepers. We particularly note the finding that existing customer lock-in may fuel enterprise AI, a development that mirrors long-standing market concerns over Microsoft's licensing and ecosystem practices.

"Moving quickly to deliver remedies is now a priority to ensure choice and growth for European cloud customers."

In 2024, Microsoft described the Open Cloud Coalition as a lobbying group for Google.

Henna Virkkunen, executive vice-president for tech sovereignty, security and democracy, stated: "Cloud services have become a cornerstone of Europe’s economy – and a prerequisite for AI – with over half of EU businesses now relying on them, combined with record investment in public cloud infrastructure.

"Given their central role in Europe's digital future, these services must operate in fair, open and competitive markets that foster trust and secure Europe's tech sovereignty."

Should the preliminary findings be confirmed and Microsoft and Amazon be designated as gatekeepers for their cloud services (they already have gatekeeper status for other services), the pair will have six months to ensure compliance with the DMA's obligations. ®