CMA's Cloud Market Verdict Is In: What the UK's Biggest Cloud Shake-Up Means for Your Business

On 31 March 2026, the Competition and Markets Authority (CMA) drew a line under its three-year investigation into the UK cloud computing market - and the verdict has divided opinion. Rather than imposing the binding Strategic Market Status (SMS) designations its own investigators recommended, the regulator accepted voluntary commitments from Amazon Web Services (AWS) and Microsoft on egress fees and interoperability. Within days, AWS and Google Cloud unveiled a jointly engineered multicloud networking solution, and Microsoft signed a landmark five-year deal with the Crown Commercial Service. For UK small and medium-sized enterprises navigating rising cloud bills and vendor lock-in, the implications are significant - and the window for action is now.

The CMA's decision arrives at a moment when UK businesses are spending more on cloud infrastructure than ever before, yet wasting a troubling proportion of that investment. Meanwhile, the multicloud movement - once a strategy reserved for large enterprises - is becoming the default approach for organisations of every size. Here's what you need to know, what's changed, and what to do about it.

What the CMA Actually Decided (and Why It Matters)

The CMA's cloud market investigation, launched in October 2023, was the most comprehensive examination of cloud computing competition ever undertaken by a UK regulator. Its investigators spent three years analysing market dynamics, interviewing stakeholders, and gathering evidence on pricing practices, technical barriers, and competitive behaviour across the sector.

The investigation's own team recommended designating AWS and Microsoft with Strategic Market Status (SMS) under the Digital Markets, Competition and Consumers Act (DMCCA) - a classification that would have granted the CMA binding enforcement powers over their conduct in the UK cloud market. SMS designation would have meant legally enforceable requirements around fair dealing, open interoperability, and transparent pricing.

Instead, the CMA accepted voluntary commitments from both providers. AWS published a "UK addendum" covering customer choice around multicloud adoption, data portability, and switching. Microsoft issued its own commitments on multicloud interoperability and data egress fees. The regulator simultaneously opened a separate investigation into Microsoft's corporate software practices under the DMCCA, signalling that scrutiny of the tech giant's broader ecosystem is far from over.

Area	What CMA Investigators Recommended	What Actually Happened
Regulatory status	Binding SMS designation for AWS and Microsoft	Voluntary commitments accepted instead
Egress fees	Mandated reductions or caps on data transfer charges	Providers pledged to address egress pricing voluntarily
Interoperability	Legally enforceable open standards and API access	Commitments to support multicloud interoperability
Enforcement	CMA powers to impose fines and remedies for non-compliance	No binding enforcement mechanism; relies on provider goodwill
Switching	Mandatory data portability tools and migration support	AWS addendum on customer choice; Microsoft pledges on portability
Public sector	Greater scrutiny of dominant public-sector contracts	Microsoft signed 5-year Crown Commercial Service deal for M365, Azure, and Copilot

The decision has not been universally welcomed. Critics point to the gap between what was recommended and what was delivered, and question whether voluntary pledges from the world's largest cloud providers will deliver meaningful change for UK businesses.

Voluntary commitments from dominant cloud providers are inherently vague and exceptionally difficult to enforce. Without binding regulatory obligations, there is no credible mechanism to ensure AWS and Microsoft follow through on their promises. UK businesses deserve stronger protections than good-faith pledges from companies with every incentive to maintain the status quo.

The Balanced Economy advocacy group has been particularly vocal, noting that the CMA's softer approach may reflect the influence of its chair, Doug Gurr - a former Amazon executive - though the regulator has firmly denied any conflict of interest. The EU, for its part, is pursuing its own investigations into AWS and Microsoft under the Digital Markets Act, suggesting that European regulators may ultimately deliver the binding requirements that the UK has opted not to impose.

For UK SMEs, the practical takeaway is clear: do not wait for regulation to solve your cloud challenges. The voluntary commitments may bring incremental improvements, but they are unlikely to fundamentally alter the competitive dynamics of a market dominated by two providers that control over half of global cloud infrastructure spending.

The Multicloud Revolution: AWS and Google Join Forces

Perhaps the most consequential development to emerge alongside the CMA's verdict is the announcement of a jointly engineered multicloud networking solution from AWS and Google Cloud. This partnership - remarkable given the fierce rivalry between the two providers - uses AWS Interconnect (multicloud) and Google Cloud Cross-Cloud Interconnect to deliver seamless, encrypted connectivity between cloud environments.

The solution, currently in preview with Microsoft Azure integration planned for later in 2026, represents a fundamental shift in how cloud infrastructure can be architected. What previously required weeks of procurement, physical cross-connects, and complex networking configuration can now be provisioned in minutes through a three-step process in the AWS Console or CLI. Bandwidth starts at 1 Gbps and will scale to 100 Gbps at general availability, with all connections encrypted by default.

Crucially, the underlying specification - the Connection Coordinator API - has been published as an open standard on GitHub, inviting the broader industry to adopt and extend the framework. Salesforce is already on board as a marquee early adopter, and the open nature of the specification means that smaller providers and specialist platforms can integrate without seeking permission from either AWS or Google.

The numbers tell their own story. With 84% of cloud leaders already intentionally operating across multiple providers, and 82% anticipating that AI workloads will further increase multicloud demand, the question is no longer whether to adopt multicloud - it's how quickly you can get there.

Cloud Market Share: The Big Three

Understanding who controls the cloud market is essential context for any switching or diversification strategy. AWS remains the dominant force, but Azure's rapid growth - particularly in the UK public sector - and Google Cloud's aggressive pricing and AI capabilities make the competitive landscape more nuanced than the headline figures suggest.

For UK SMEs, the AWS-Google partnership is particularly significant because it removes one of the most persistent technical barriers to multicloud adoption: the complexity and cost of connecting workloads across different providers. If you've been hesitant to split workloads between AWS and Google Cloud because of networking headaches, that excuse is rapidly disappearing.

The Cloud Cost Crisis: Why UK Businesses Are Overspending

The CMA investigation and the multicloud developments are playing out against a backdrop of spiralling cloud costs that are hitting UK businesses hard. The numbers paint a concerning picture: cloud spend now exceeds 10% of revenue for IT-focused businesses, with broader UK firms reporting cloud consuming between 12% and 18% of total revenue. For small and medium-sized enterprises operating on tight margins, these figures represent a serious drag on profitability and growth.

The waste problem is even more alarming. According to IBM research, 32% of all cloud spending is wasted - money that delivers no productive value to the organisation. That's nearly a third of every pound spent on cloud infrastructure going straight down the drain, consumed by idle resources, oversized instances, forgotten environments, and poor architectural decisions.

Idle and underutilised resources alone account for 28% to 35% of total cloud waste. These are virtual machines running at 5% capacity, storage volumes attached to terminated instances, development environments left running over weekends and holidays, and test databases that nobody has touched in months. Every one of these represents money leaving your business for no return.

The drivers of overspending are well-documented but stubbornly persistent. Nearly half of UK businesses - 48% - cite high egress fees as a direct cause of overspending, because the cost of moving data out of their current provider discourages them from switching to more competitive alternatives or distributing workloads more efficiently. The same proportion, 48%, identify rising cloud costs as their single most pressing cloud management challenge.

Where the Money Goes: Cloud Cost Challenges

AI and machine learning workloads are adding fresh pressure. These compute-intensive tasks now account for 22% to 28% of public cloud spend among UK enterprises, and that proportion is rising quarter on quarter as organisations rush to integrate generative AI, large language models, and machine learning pipelines into their operations. Without careful management, AI workloads can consume budgets at an extraordinary rate - a single poorly optimised training job can rack up thousands of pounds in hours.

Perhaps the most telling statistic is this: only 23% of organisations consider themselves highly efficient at managing cloud costs. That means more than three-quarters of UK businesses know - or should know - that they're leaving money on the table. In an economic climate where every pound of IT spend needs to deliver demonstrable value, this level of inefficiency is not sustainable.

What This Means for UK SMEs

The convergence of the CMA's decision, the AWS-Google multicloud partnership, and the ongoing cloud cost crisis creates both risks and opportunities for UK small and medium-sized enterprises. The businesses that act decisively now will be best positioned to benefit from the changing landscape; those that wait for regulation to protect them may find themselves paying more and getting less.

First, the regulatory reality. The CMA's voluntary commitments provide a degree of reassurance that AWS and Microsoft will take steps to improve interoperability and reduce switching barriers. However, voluntary means voluntary. There is no penalty for non-compliance, no independent monitoring, and no mechanism for businesses to escalate complaints if the commitments are not honoured. The parallel EU investigations under the Digital Markets Act may eventually produce binding requirements that extend to UK operations, but that timeline is measured in years, not months.

Second, the multicloud opportunity is now more accessible than it has ever been. The AWS-Google interconnect, combined with the open Connection Coordinator API specification, means that even modestly sized organisations can begin distributing workloads across providers without the engineering overhead that previously made multicloud a big-enterprise privilege. This matters because multicloud is not just about resilience - it's about negotiating leverage. A business that can credibly threaten to move workloads to a competitor is a business that gets better pricing, better support, and better contract terms.

Third, cloud cost optimisation is no longer optional. With 32% of spend wasted and nearly half of UK businesses overspending due to egress fee lock-in, the financial case for rigorous cloud cost management has never been stronger. Structured cost optimisation - through right-sizing, reserved instances, spot pricing, automated scheduling, and architectural review - can reduce cloud spend by 25% to 30% without sacrificing performance or capability.

Your Multicloud Action Plan

Here are the practical steps every UK SME should be taking in light of the CMA verdict and the evolving cloud landscape:

1. Audit your current cloud estate. Map every resource, every subscription, and every service across all providers. You cannot optimise what you cannot see. Use your provider's native cost management tools - AWS Cost Explorer, Azure Cost Management, or Google Cloud's billing reports - to establish a baseline of where your money is going.
2. Identify and eliminate waste immediately. Target idle resources, oversized instances, and unattached storage volumes first. These are the lowest-hanging fruit and can deliver savings within days, not weeks. Set up automated alerts for resources that fall below utilisation thresholds.
3. Evaluate your egress exposure. Calculate how much you're currently paying in data transfer fees and how much you would pay to migrate key workloads to an alternative provider. This information is essential for negotiating with your current provider and for planning any multicloud strategy.
4. Explore the AWS-Google interconnect. Even if you're not ready to adopt multicloud today, register for the preview and test the networking capabilities with non-critical workloads. Understanding the technology now will put you ahead of competitors when it reaches general availability.
5. Negotiate your contracts. Use the CMA's voluntary commitments as leverage in your next renewal discussion. Ask your provider explicitly what steps they are taking to honour their commitments on egress fees, data portability, and interoperability. Get specific answers in writing.
6. Adopt FinOps principles. Establish cross-functional accountability for cloud spend, implement tagging and chargeback policies, and create regular review cadences where engineering and finance teams jointly examine cloud costs and usage patterns.
7. Plan for AI workload costs. If you're deploying or planning to deploy AI and machine learning workloads, build cost guardrails from day one. Set budget limits, use spot instances for training where possible, and monitor inference costs closely - AI workloads can scale costs faster than any other category.
8. Engage a specialist partner. Cloud optimisation is a discipline, not a one-off project. Working with an experienced managed IT services provider who understands the UK market, regulatory landscape, and multicloud architecture can accelerate savings and reduce the risk of costly missteps.

The FinOps Opportunity

FinOps - the practice of bringing financial accountability to cloud spending through collaboration between engineering, finance, and business teams - has seen adoption grow by 46% in 2025 alone. This surge reflects a growing recognition across UK businesses that cloud cost management cannot be left to chance, nor delegated entirely to technical teams who may optimise for performance without visibility into the financial impact of their decisions.

The FinOps framework provides a structured approach to cloud financial management, built around three phases: Inform (giving everyone visibility into cloud costs and usage), Optimise (identifying and acting on savings opportunities), and Operate (embedding cost-awareness into daily engineering and business practices). For UK SMEs, even a lightweight implementation of FinOps principles can deliver transformative results.

Structured cost optimisation programmes, guided by FinOps practices, consistently deliver savings of 25% to 30% on total cloud spend. For a business spending £100,000 per year on cloud infrastructure - not unusual for a 50-person company with modern IT requirements - that represents £25,000 to £30,000 returned to the bottom line annually. Over three years, those savings compound as the organisation becomes increasingly disciplined about cloud purchasing and resource management.

The businesses that will thrive in the post-CMA landscape are those that combine multicloud flexibility with rigorous cost management. They will use the new AWS-Google interconnect to distribute workloads strategically, leverage competition between providers to secure better pricing, and apply FinOps discipline to ensure that every pound of cloud spend delivers measurable business value.

The CMA's cloud market verdict marks the end of one chapter and the beginning of another. Voluntary commitments from AWS and Microsoft may or may not deliver the competitive improvements that UK businesses need. The AWS-Google multicloud partnership is lowering technical barriers to provider diversification. And the cloud cost crisis continues to demand urgent attention from every organisation that relies on cloud infrastructure - which, in 2026, means virtually every business in the country.

The message for UK SMEs is straightforward: don't wait for regulators to fix the market. Take control of your cloud strategy now. Audit your spend, eliminate waste, explore multicloud, and build the financial discipline that will protect your business as the cloud landscape continues to evolve. The tools and partnerships are finally in place to make multicloud practical for organisations of every size. The only question is whether you'll seize the opportunity - or let your competitors get there first.