The European Commission wants to designate Amazon Web Services and Microsoft Azure as gatekeepers under the Digital Markets Act, a move that would impose strict competition rules on the two companies controlling roughly 70% of Europe's cloud infrastructure market.
The European Commission on Thursday issued a preliminary view that Amazon Web Services and Microsoft Azure should be designated as gatekeepers under the Digital Markets Act, citing revenue, operational capacity and investment levels that have significantly outpaced competitors. The designation would extend the bloc's landmark competition framework into cloud infrastructure for the first time, marking a significant expansion of regulatory oversight in a sector that has largely operated outside the DMA's scope.
"We continue to engage constructively with the commission. The cloud sector in Europe is innovative, highly competitive and an accelerator for growth across the economy," a Microsoft spokesperson said. Amazon did not immediately respond to a request for comment, though it said earlier this month that applying the DMA to cloud services risked undermining competitiveness, deterring investment and weighing on innovation.
The two cloud platforms together account for roughly 70% of European cloud revenue, according to industry estimates. The standard DMA thresholds require 45 million monthly active users and a market capitalization of at least 75 billion euros to trigger automatic gatekeeper status — neither company meets those quantitative benchmarks for their cloud divisions. The commission is arguing that qualitative factors, including the scale of their infrastructure investments and the degree of customer dependency, justify the designation. Amazon and Microsoft have invested tens of billions of euros in European data center capacity over the past three years, with Amazon alone committing 10 billion euros to expand its cloud infrastructure in Germany and other markets.
If the commission finalizes the designation, Amazon and Microsoft would have six months to comply with obligations including enhanced interoperability requirements, restrictions on customer lock-in practices and data portability rights without punitive fees. Non-compliance carries fines of as much as 10% of global annual turnover, rising to 20% for repeat offenses. Preliminary findings are expected around the week of June 22, with a final decision targeted before the end of 2026.
Egress Fees Under Scrutiny
Egress charges — the fees companies pay to move data out of a cloud provider — have long been a flashpoint for enterprise customers. Critics argue these costs function as a de facto switching penalty that keeps customers anchored to their existing provider regardless of whether a competitor offers better pricing or performance. The DMA's data portability requirements would directly target this practice, potentially lowering barriers for European cloud rivals such as Deutsche Telekom's T-Systems, OVHcloud and others that have struggled to gain traction against the U.S. hyperscalers.
The last time EU regulators targeted digital gatekeeper practices, the impact rippled across the technology sector. After the commission designated Apple as a gatekeeper for its App Store in 2023, the company was forced to allow alternative app marketplaces and payment systems in Europe, a change that opened new revenue streams for developers and pressured Apple's services margin. A similar dynamic could play out in cloud, where smaller providers and enterprise customers stand to benefit from reduced switching costs.
What's at Stake for Investors
Amazon and Microsoft are already designated as gatekeepers for other services — Amazon for its Marketplace platform and Microsoft for LinkedIn. Extending the framework to cloud infrastructure represents a meaningful expansion of the DMA's reach. AWS and Azure are among the most profitable divisions for both companies, and any regulatory constraints on pricing, interoperability or customer retention could pressure margins in a business that has been a primary driver of earnings growth.
The commission is also running a concurrent investigation into whether existing rules adequately address competitiveness issues across the broader cloud sector. That parallel probe could lead to additional regulatory measures beyond the gatekeeper designation, creating a multiyear compliance overhang for both companies.
This article is for informational purposes only and does not constitute investment advice.
