French competition watchdog to look into ‘complex’ cloud sector

The subject is particularly sensitive in France, where national cloud players are not only accusing Google, Amazon and Microsoft of using unfair practices, but also the government of genuinely preventing the emergence of European champions by giving too much importance to American giants, particularly in public procurement. [Rawpixel.com/Shutterstock]

France’s competition watchdog announced on Thursday (27 January) that it would look into the competitive functioning of the cloud market as local players accuse US tech giants of unfair practices. EURACTIV France reports.

France’s competition authority, known as AdlC, will investigate the competitive functioning of the cloud sector at the behest of its new president, Benoit Coeuré.

Speaking to MPs on 12 January, Coeuré said he wanted to make the digital economy a priority of his term, and he felt it was “important and justified for the authority to rapidly undertake in-depth work”, particularly regarding the cloud.

The watchdog will examine the “competitive dynamics of the sector and the presence of players in the different segments of the value chain, as well as their contractual relationships” with a focus on “the definition of relevant markets in the cloud sector, the assessment of the position and competitive advantages of the different players involved”, the press release reads.

The AdlC pointed out that this investigation comes as partnerships to bring about “sovereign” or “trusted” clouds multiplying in Paris and Brussels.

The subject is particularly sensitive in France, where national cloud players accuse Google, Amazon and Microsoft of using unfair practices and the government of preventing European champions from emerging by giving too much importance to American giants, particularly in public procurement.

Although digital issues are struggling to penetrate public debate in the run-up to the French presidential election of April 2022, candidates are beginning to take up the issue of digital sovereignty, and more specifically, data sovereignty.

French cloud industry regrets government's ambivalence in dealing with digital giants

France’s “trusted cloud” strategy is sending “contradictory messages” and leaving little room for competition in the race for digital sovereignty already dominated by the likes of Amazon, Google and Microsoft, French cloud industry players have said. EURACTIV France reports.

A long-awaited instruction

“This announcement is excellent news,” said Yann Lechelle, CEO of French cloud provider Scaleway. “The oligopolistic situation in cloud markets, or even, in some segments, a monopolistic tendency, leads to many perverse effects: user lock-in, exploding IT costs, dependency situations” and would prevent the emergence of alternative players, he told EURACTIV France.

For Guillaume Champeau of Clever Cloud, another major hosting company, this analysis should lead to corrective measures to fight against these “unacceptable anti-competitive practices”. “These measures should enable startups to stop being subjected to practices that make them permanently dependent on their suppliers,” he added.

French cloud operators call on the AdlC to focus on several issues like the massive use of “cloud credits” offered by the most prominent providers who give companies free access to their services. However, this can lead to a technology lock-in effect or so-called “egress fees”.

“The US authorities were the first to identify that a certain number of practices, commonplace among dominant players, annihilate any possibility of free and fair competition,” said Lechelle. It would be “very healthy for the European competition authorities to make up their minds about this situation,” the Scaleway CEO added.

According to Champeau, this announcement reflects “the absolute necessity to include Cloud services, including hosting software, in the Digital Markets Act, in order to have the means to act quickly against abusive practices by dominant players in the sector.”

The competition watchdog is expected to deliver its conclusions regarding the investigation in early 2023. Meanwhile, a “broad public consultation” will be held during the summer for all stakeholders to get together.

EU parliament adopts regulation targeting internet giants

EU lawmakers adopted their version of the Digital Markets Act (DMA) in a plenary vote on Wednesday (15 December), formalizing their mandate to enter interinstitutional negotiations on this key piece of digital legislation with the European Council and Commission.

[Edited by Luca Bertuzzi/ Alice Taylor]

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