Big Tech competitors object to EU exemption of Google Cloud from DMA crackdown

The European Union is stepping up its regulation of big tech, this time turning its attention to artificial intelligence and cloud computing.

On Thursday, the European Commission announced plans to designate Microsoft Azure and Amazon Web Services as gatekeepers under the bloc’s Digital Markets Act (DMA).

The two companies are the world’s largest cloud service providers.

The DMA, a legislation that establishes a set of guidelines on what big platforms can and cannot do in order to maintain fair markets, is being applied to cloud providers for the first time by the EU.

The ruling also makes it very evident that the bloc wants to oversee the businesses at the core of the AI industry rather than just the daily apps.

In its announcement, the Commission pointed out that AWS and Azure have become essential services that connect businesses to their customers, even though they don’t meet the usual size requirements under the DMA.

Regulators argued that both companies are much larger than their competitors.

This makes it expensive and difficult for customers to switch to another cloud provider.

The Commission also emphasized the growing role of partnerships and AI services in cloud purchasing decisions.

This has made it harder for smaller competitors to win market share, as AWS and Azure continue to capture most of the surging demand for AI-powered cloud computing within their own ecosystems.

Tech Commissioner Henna Virkkunen said cloud services “have become a cornerstone of Europe’s economy, and a prerequisite for AI.”

She also said that, because these services play a key role in Europe’s digital future, they need to function in fair, open, and competitive markets that build trust and help ensure Europe’s technological independence.

A backlash over uneven rules

This decision has upset the companies, with most of the anger centered on how the rules will affect competition.

By naming AWS and Azure but leaving Google Cloud out for now, the Commission has created an unfair situation.

Microsoft and Amazon will now have to deal with additional expenses and demands.

They need to cease favoring their own goods and services, make their systems compatible with competitors, and make it easier for clients to transfer their data.

Google, on the other hand, can focus its money on growing the business and adding Gemini AI into its cloud services.

A Microsoft representative seemed to take aim at Google in a statement to Euractiv, claiming that the cloud business in Europe is competitive, dynamic, and a major engine of economic expansion.

The representative went on to say that the market could be negatively impacted and competition could be distorted if Google Cloud and Gemini’s growing influence is not taken into consideration.

A spokesman for AWS also objected, saying that the decision “fails to account for the range of cloud solutions available to European consumers” and could discourage investment.

The spokesman also stated that the EU already governs cloud services through the Data Act and contended that adding more overlapping regulations under the DMA would restrict access to cutting-edge technology and reduce Europe’s competitiveness.

Labeling Google Cloud’s early inclusion as unfair overlooks the larger context.

It may give Google a temporary boost, but the benefit is unlikely to be significant and will not last long.

AWS and Azure still dominate the market, and most companies rarely switch providers.

Google may be added later anyway; this ruling is only preliminary.

Furthermore, consumers will find it much easier to move cloud providers as per the EU’s Data Act, which goes into effect in 2027.

Any advantage Google obtains now is likely to be minor and ephemeral, given the EU’s strong push for digital independence and support for European cloud providers.

What happens next?

This is only a preliminary decision, not the final one.

Microsoft and Amazon still have time to challenge the decision and submit written responses before the Commission issues its final ruling in November.

If the decision is confirmed, both companies will then have six months to fully comply with the DMA rules.

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