Ofcom said it received evidence showing Microsoft makes it less attractive for customers to run its Office productivity apps on cloud infrastructure other than Microsoft Azure.
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Microsoft and Amazon were accused by U.K. regulators Wednesday of unfairly restricting competition in the cloud services market, in a significant development that could ultimately lead to an antitrust investigation into their business practices.
Ofcom, the British media watchdog, published the initial findings of a market study examining the massive cloud services market. Ofcom opened a review into the sector in September, seeking to find whether firms offering public cloud infrastructure pose any barriers to competition.
“Our provisional view is that competition is being limited by market features that make it more difficult for customers to switch and use multiple suppliers (known as ‘multi-cloud’),” Ofcom said. Those market features include:
“Egress fees” cloud vendors charge companies to transfer data out of a cloud — Ofcom said so-called “hyperscalers” like Microsoft and Amazon set their egress fees “significantly higher” than most other providers.
Technical restrictions on “interoperability” from leading cloud firms that prevent some of their services working effectively with those of other providers.
Committed spend discounts structured in such a way they can incentivize customers to use a single hyperscaler for all or most of their cloud needs.
The regulator proposed referring the case for further investigation by the Competition and Markets Authority, the U.K. regulator tasked with ensuring markets are healthily competitive.
“We received provisional findings from Ofcom today in relation to its Cloud market study and are in the process of reviewing these,” a CMA spokesperson told CNBC via email.
“We stand ready to carry out a market investigation into this area, should Ofcom determine it is required following the completion of its consultation process.”
Microsoft, Amazon and Google, sometimes referred to as “hyperscalers” due to their ability to provide computing and storage at enterprise scale, are the largest players in the massive cloud infrastructure market, which was estimated to be worth £4.5 billion ($5.6 billion) to £5.0 billion in 2021, according to Ofcom.
Microsoft and Amazon’s Amazon Web Services unit command a 60% to 70% share of the market, according to the regulator, with Google accounting for 5% to 10% of total market share.
Ofcom said it was concerned by allegations surrounding licensing conditions set by cloud vendors, singling out Microsoft in particular as an example of companies allegedly “using their strong position in software products to distort competition in cloud infrastructure.”
The regulator said it received evidence showing Microsoft makes it harder for customers of its Office productivity apps to run them on cloud infrastructure other than Microsoft Azure.
Microsoft, in a statement, said: “We look forward to continuing our engagement with Ofcom on their cloud services market study. We remain committed to ensuring the U.K. cloud industry stays highly competitive, and to supporting the transformative potential of cloud technologies to help accelerate growth across the U.K. economy.”
An Amazon Web Services spokesperson told CNBC: “These are interim findings and AWS will continue to work with Ofcom ahead of the publication of its final report.”
“At AWS, we design our cloud services to give customers the freedom to build the solution that is right for them, with the technology of their choice,” they added. “This has driven increased competition across a range of sectors in the UK economy by broadening access to innovative, highly secure, and scalable IT services.”
Last month, Microsoft reportedly offered further changes to its cloud computing practices to avoid facing an EU antitrust investigation, according to Reuters. It comes after Microsoft last year announced a number of changes to its cloud contract terms, effectively making it easier for customers to use competing cloud services.
The EU has been looking into competition concerns surrounding the company’s cloud business following complaints from France’s OVHcloud and other smaller cloud vendors.
Francisco Mingorance, secretary general of the Cloud Services Providers in Europe, said Ofcom’s findings regarding Microsoft’s licensing practices show that regulators are “waking up to the ways in which Microsoft continues to distort fair competition in the cloud” and recommended national and EU antitrust authorities open formal investigations into the matter.
The provisional findings from Ofcom represent a blow to Amazon and Microsoft, two titans of the technology world. These companies did well out of the Covid-19 pandemic as people were forced into their homes, driving up demand for more digital means of staying connected and doing business.
However, more recently, they’ve faced struggles as pandemic restrictions have been lifted and higher interest rates dented the outlook on technology stocks. Amazon, Microsoft and Alphabet all reported deceleration in their respective cloud units in the fourth quarter of 2022.
The position was valued at about $160 million as of Wednesday’s close.
Tripadvisor shares have been flat since the start of the year after plummeting more than 30% in 2024. Last year, the travel review and booking company said it created a special committee to explore potential options.
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People stand in front of an Apple store in Beijing, China, on April 9, 2025.
Tingshu Wang | Reuters
Apple iPhone sales in China rose in the second quarter of the year for the first time in two years, Counterpoint Research said, as the tech giant looks to turnaround its business in one of its most critical markets.
Sales of iPhones in China jumped 8% year-on-year in the three months to the end of June, according to Counterpoint Research. It’s the first time Apple has recorded growth in China since the second quarter of 2023.
Apple’s performance was boosted by promotions in May as Chinese e-commerce firms discounted Apple’s iPhone 16 models, its latest devices, Counterpoint said. The tech giant also increased trade-in prices for some iPhone.
“Apple’s adjustment of iPhone prices in May was well timed and well received, coming a week ahead of the 618 shopping festival,” Ethan Qi, associate director at Counterpoint said in a press release. The 618 shopping festival happens in China every June and e-commerce retailers offer heavy discounts.
Apple’s return to growth in China will be welcomed by investors who have seen the company’s stock fall around 15% this year as it faces a number of headwinds.
Since then, Huawei has aggressively launched devices in China and has even begun dipping its toe back into international markets. The Chinese tech giant has found success eating away at some of Apple’s market share in China.
Huawei’s sales rose 12% year-on-year in the second-quarter, according to Counterpoint. The firm was the biggest player in China by market share in the second quarter, followed by Vivo and then Apple in third place.
“Huawei is still riding high on core user loyalty as they replace their old phones for new Huawei releases,” Counterpoint Senior Analyst Ivan Lam said.
Chinese tech giant Baidu has bolstered its core search platform with artificial intelligence in the biggest overhaul of the product in 10 years.
Analysts told CNBC the move was a bid to keep ahead of fast-moving rivals like DeepSeek, rather than traditional search players.
“There has been some small pressure on the search business but the focus on AI and Ernie Bot is a key move ahead,” Dan Ives, global head of tech research at Wedbush Securities, told CNBC by email. Ernie Bot is Baidu’s AI chatbot.
“Baidu is not waiting around to watch the paint dry, full steam ahead on AI,” he added.
Baidu AI overhaul
Baidu is China’s biggest search engine, but — as is also being seen by Google — the search market is being disrupted.
Users are flocking instead to AI services such as ChatGPT or DeepSeek, which shocked the world this year with its advanced model it claimed was created at a fraction of the cost of rivals.
But Kai Wang, Asia equity market strategist at Morningstar, also noted that short video platforms such as Douyin and Kuaishou are also getting into AI search and piling pressure on Baidu.
To counter this, Baidu made some major changes to its core search product:
Users can now enter more than a thousand characters in the search box, versus 28 previously;
Questions can be asked in a more direct and conversational manner, mirroring how people now use chatbots;
Users can ask questions through voice but also prompt the seach engine with pictures and files;
Baidu has integrated its AI chatbot features, which enable users to generate photos, text and videos, into the product.
“This is more aligned with how people use ChatGPT and DeepSeek in terms of how they look for answers,” Wang said.
Outside of China, Google has also been looking to enhance its core search product with AI, highlighting how search has been under pressure from the burgeoning technology.
Baidu on the offense
Baidu was one of China’s first movers when it came to AI, releasing its first models and ChatGPT-style product Ernie Bot to the public in 2023. Since then, it has aggressively launched updated AI models.
However, the Beijing-headquartered company has also faced intense competition from fellow tech giants like Alibaba and Tencent, as well as upstarts such as DeepSeek.
These companies have also been launching new models and infusing AI into their products and Baidu’s stock has fallen behind as a result. Baidu shares have risen around 2.5% this year, versus a 30.5% surge for Alibaba and a 20% rise for Tencent.
“This is a defensive and offensive move … Baidu needs to be aggressive and perception-wise show they are not the little brother to Tencent on the AI front,” Wedbush Securities’ Ives added.