Public Sector

Every month of 'careful consideration' is another month Redmond laughs all the way to the bank

Here's the uncomfortable truth: every week the UK's Competition and Markets Authority (CMA) hesitates on its decision on the outcome of its public cloud services market investigation, the meter keeps running and taxpayers continue to foot the bill.

This is not abstract market theory or regulatory nuance. We are talking about real taxpayer money, flowing out of the public purse into long-term licensing arrangements that grow harder to unwind with each passing month. At the centre of this is the Government's Crown Commercial Service (CCS) agreement with Microsoft, a deal that, while designed to streamline procurement, risks becoming a stunning own goal if left unchecked.

The CMA has already acknowledged harms to competition and customers in the UK public cloud market. That much is clear. What is less clear, and growing more frustratingly so, is why decisive action continues to drift. In this context, delay is not neutral. It actively reinforces the status quo which is already expensive and risks further entrenchment by the two dominant forces in the cloud market: AWS and Microsoft.

From central government departments and their non-departmental public bodies to NHS trusts and local councils, public sector organisations are deeply embedded in Microsoft's ecosystem. Licensing structures, bundled services, and pricing models are notoriously complex. Once you are in, the cost of switching - or even meaningfully diversifying - becomes prohibitive. This is not accidental; it is the result of years of intentional, strategic positioning.

Every delay by the Competition and Markets Authority enables this dynamic to continue. Contracts roll over and renewals happen under existing, often punitive, terms. Negotiating leverage weakens and, more critically, the opportunity to introduce meaningful competition into the market slips further away.

Now add to this the government's latest ambitions around AI and innovation. Rachel Reeves has made it clear that AI investment is central to the UK's growth strategy. That, in my opinion, is a sensible and necessary direction. But ambition without market reform risks exacerbating an already distorted and inefficient system.

Why? Because AI capability, particularly in enterprise settings, is increasingly tied to existing locked-in cloud ecosystems. Microsoft's recent push with Copilot and its "Copilot for Work" offerings illuminates this point. These tools are not standalone products; they are deeply integrated into Microsoft 365, Azure, and the broader Microsoft stack. Making their product suite stickier and further entrenched while the CMA hesitates.

For public sector organisations already locked into Microsoft agreements via CCS, the path of least resistance means expanding within the same ecosystem because the cost of transition is too excessive. Adopt Copilot, increase licence tiers, add more services and before long, what began as a cloud hosting decision becomes an all-encompassing generational dependency.

This is how market power cements its position. Not through a single dramatic move, but through a series of incremental, seemingly rational decisions.

Hesitation from the CMA plays directly into this pattern. It discourages bold procurement choices and nudges public bodies toward "safe" options. Ultimately it signals uncertainty and a lack of commitment in the CMA's mission to promote competition and consumers. 

There is also a broader strategic dimension that should not be ignored. The UK has been signalling a desire for closer economic alignment with the EU, particularly in digital markets and AI. The European Commission has already taken a more assertive stance on cloud competition and harmful practices. 

This presents a rare opportunity. The UK can either move in step with European efforts to boost cloud markets by encouraging interoperability, reducing lock-in, and fostering genuine competition or it can lag behind, allowing entrenched positions to solidify further.

A decisive CMA ruling in the weeks to come could set the tone and send a clear message that the UK is serious about creating a competitive, innovative cloud market. It could empower public sector buyers to negotiate better deals, explore multi-cloud strategies, and reduce dependency on a several providers.

Conversely, continued delay sends the opposite message: that the current dynamics are tolerable, that intervention is optional, and that the costs, both financial and strategic, are acceptable.

They are not. Every pound spent unnecessarily on inflated licensing costs is a pound not spent on frontline services, such as improved healthcare, education, emergency services or housing. Every locked-in contract reduces flexibility at a time when agility is critical. And every missed opportunity to introduce competition makes future reform more difficult and more expensive.

The CMA is at a pivotal moment. Its decision will not just shape the cloud market; it will influence how billions of pounds of public money are spent over the coming years.

Delay is, effectively, a decision in itself. Delay is a decision to allow current trends to continue unchecked.

If the UK is serious about digital sovereignty, fiscal responsibility, and fostering innovation and economic growth, then the CMA must act swiftly. Because the longer this drags on, the more expensive the outcome becomes for the UK taxpayer. ®

Bill McCluggage was Executive Director for IT Strategy and Policy in the Cabinet Office and Deputy UK Government CIO from 2009 to 2012, CTO for EMC System UK (now Dell Technologies) in the UK and Ireland and then the first Chief Information Officer for the Irish Government in 2013.

He is now a technology advisor and consulted for a range of companies including HPE, IBM, Concentrix, Tanium, Red Hat Software and Google.