UK communications regulator Ofcom has published an interim report that proposes the cloud infrastructure market be referred to the UK's Competition and Markets Authority (CMA) due to concerns around a decline in competition.

The report said that existing cloud customers in the UK are paying more than they should be for their cloud infrastructure or having to settle for low-quality services, and that the regulator had heard concerns from some customers about their ability to switch or use multiple providers.

As a result, Ofcom said it was referring the cloud infrastructure market to the CMA for a market investigation that would allow the regulator to further examine if there are interventions that could address the barriers identified in the report and improve the market for customers.

The news comes three months after Ofcom raised "significant concerns" about Amazon Web Services (AWS) and Microsoft, alleging that they were harming competition in cloud infrastructure services and abusing their market positions with practices that make interoperability difficult.

Ofcom defines cloud infrastructure services as those which are built on physical servers and virtual machines hosted in data centers and consisting of infrastructure as a service (IaaS) products, such as storage, computing and networking, and platform as a service (PaaS), which includes the software tools needed to build and run applications.

When the initial investigation was launched, Ofcom said that AWS and Microsoft Azure had a combined UK market share of between 60% and 70%, while the next nearest competitor, Alphabet-owned Google, has a 5% to 10% share.

Consequently, between 2018 and 2021, the percentage of cloud providers that were not AWS, Microsoft, or Google fell from 30% to 19%, causing Ofcom to note that such levels of market dominance could potentially make it harder for smaller cloud providers to compete with the market leaders, further consolidating the big providers' revenue and market share.

Ofcom estimates that in 2021, the market for cloud infrastructure in the UK was worth between$4.9 billion (