"Cloud Market Competition Constraints"... Fair Trade Commission Moves to Curb 'Amazon'

[Asia Economy Reporter Eunju Lee] The Fair Trade Commission (FTC) plans to regulate anti-competitive practices such as self-preferencing to activate competition in the domestic cloud market. It has been determined that the domestic cloud market is highly dependent on global big tech companies like Amazon (AWS), and competition is restricted due to technical incompatibilities during the cloud transition process.

On the 28th, the FTC announced the results of the "Cloud Service Sector Survey Research." This is a comprehensive analysis of the first-stage survey conducted on major cloud providers (32 companies) and the second-stage survey conducted on over 3,000 stakeholders including client companies and distribution partners. The survey results showed that the domestic cloud market is significantly concentrated among a few global big tech companies such as Amazon (AWS). Over the past three years, Amazon, the top provider, held a market share of 62-78%, followed by Microsoft (MS) with 6-12%.

The cloud market was diagnosed as having restricted competition because customers find it difficult to use multiple cloud services or easily switch between them, a phenomenon known as "multi-homing." This is due to significant technical constraints, such as the need to reconfigure already established business processing methods (programming languages, APIs, etc.) when moving clouds. Additionally, the cost and time required to smoothly transfer large volumes of accumulated data in existing infrastructure to competitors also pose significant constraints. The survey found that only 14% of customers had experience switching cloud providers, and 68% of customers had no plans to adopt multi-cloud strategies.

The FTC plans to establish policies addressing monopolies and oligopolies, including institutional improvements, to enhance competitive pressure in the cloud market. First, it will continuously monitor whether major cloud providers engage in anti-competitive practices such as self-preferencing by bundling non-cloud and cloud services during transactions, and whether cloud providers set unfavorable trading conditions for customers.

An FTC official stated, "The survey results confirmed that the domestic cloud market is highly concentrated and characterized by competition restrictions due to technical incompatibility and data concentration." He added, "Major overseas competition authorities such as the European Union (EU), the United States, and Germany are pursuing legislation focused on preventive regulations that prohibit major platform operators from restricting data mobility or interoperability."