Europe needs a cloud market that values openness, interoperability, and fairness, but we still have a long way to go.
Policymakers may think that the Data Act, which addresses cloud switching, and the Digital Markets Act (DMA), aimed at digital market fairness, have put us on the right track. This belief is misleading. Serious issues remain unaddressed.
The Data Act tackles some egress fees and technical lock-in, but it completely misses the mark on unfair licensing practices, committed spend agreements, and cloud credits. These practices limit choice and stifle innovation. Some software companies impose higher charges on customers who use competing clouds to host their services. Competition authorities across Europe are currently investigating these unfair licensing practices.
Committed spend agreements get pitched as beneficial, especially in the public sector, but they often force customers to commit upfront to larger cloud usage just to keep their discounts. This creates a risk of lock-in. Free cloud credits may look appealing, but they can also trap customers in a cycle where exploring other options becomes difficult.
For anyone looking to adopt a multi-cloud strategy, the Data Act won’t simplify the complications and costs arising from these unfair licensing practices. The DMA isn’t the right tool either. Its focus is on gatekeepers that connect business users with consumers, while the cloud market doesn’t fit this model. Even if it did, the DMA wouldn’t address the unfair practices faced by members of the Open Cloud Coalition.
Public procurement remains a major hurdle. Smaller companies find it nearly impossible to compete in a system that favors established players with the resources to handle complex bureaucracy. Recent initiatives by European policymakers haven’t tackled this.
However, there are chances on the horizon. Upcoming reforms in public procurement and a proposed AI & Cloud Development Act could help level the playing field. Instead of creating new ex-ante rules or revisiting the DMA, focusing on swift antitrust enforcement could be the most effective way to address anti-competitive practices now.
The European Commission’s Directorate General for Competition and national authorities have been investigating the cloud market for some time, and decisive actions are overdue. Thankfully, some members of the European Parliament acknowledge the urgency of addressing these issues, calling for quick actions against unfair licensing practices.
As discussions around the Paris AI Action Summit continue, the European Commission speaks of seizing AI opportunities. However, none of this will succeed without a healthy, fair cloud services market to support it.
While the UK’s Competition and Markets Authority appears to be making strides in tackling these issues, Europe must put its own house in order or risk being left behind. There’s a lot to be done, but progress is possible if there’s genuine political will and focus on the pressing issues at hand.