The European Union has signalled its intention to designate Amazon Web Services and Microsoft Azure—the world's two largest cloud computing providers—as "gatekeepers" under the bloc's landmark Digital Markets Act, a regulatory framework designed to constrain the market dominance of technology giants. The move, announced by EU antitrust regulators on June 25, represents a substantial widening of regulatory scope beyond the traditional digital platforms such as search engines, social media networks, and app distribution services that have been the primary focus of enforcement to date.
Under the DMA designation, both companies would face an extensive array of obligations and prohibitions intended to level the competitive landscape in cloud services. The regulatory framework specifically targets self-preferencing practices, whereby dominant platforms prioritize their own services over competitors' offerings, and mandates that both AWS and Microsoft ensure their systems maintain interoperability standards and facilitate data portability for users. These requirements represent a fundamental shift in how cloud infrastructure providers operate across European markets, potentially affecting everything from data centre operations to the bundling of artificial intelligence capabilities with cloud services.
The regulatory push into cloud infrastructure marks a significant escalation in the EU's ambitions for technology regulation. Previous DMA designations have concentrated on discrete digital services—search functions, social networks, marketplace platforms—that operate at what regulators term the "core" level of digital ecosystems. Cloud computing, by contrast, functions as foundational infrastructure supporting virtually every other digital service, making it a sector of critical economic importance as businesses increasingly migrate workloads to the internet. The EU's rationale centres on the sector's essential role in Europe's economic future and, notably, in enabling the development and deployment of artificial intelligence systems across the continent.
Henna Virkkunen, the EU's chief technology official, framed the regulatory intervention in terms of economic sovereignty and competitive markets. She emphasised that cloud services now form an indispensable component of European economic activity, with more than half of all EU businesses currently using public cloud platforms. The statement underscored that the sector's centrality to artificial intelligence development—a technological domain where Europe is attempting to establish competitive parity with American and Chinese competitors—demands that markets remain transparent, accessible, and contestable rather than dominated by a small number of entrenched players.
The regulatory designation reflects findings from a seven-month investigation that examined market structure, competitive dynamics, and the strategic advantages enjoyed by the two dominant providers. EU regulators identified several factors that persuaded them that AWS and Microsoft Azure exercise disproportionate market power. Both companies command substantially higher turnover than competing cloud providers, operate with greater technical capacity, and maintain established user bases that face considerable switching costs should they attempt to migrate to rival platforms. The investigation also highlighted how locked-in customers—those whose operations are deeply integrated with specific cloud providers' systems—face practical and financial impediments to changing vendors, a dynamic that reinforces market concentration.
A particularly significant aspect of the investigation centred on how cloud providers leverage artificial intelligence tools and strategic partnerships to influence procurement decisions by enterprise customers. AWS and Microsoft have both invested heavily in developing proprietary artificial intelligence capabilities and forging partnerships with leading AI companies, and the EU regulators concluded that these competitive factors substantially influence which cloud provider organisations select. For Southeast Asian companies and governments monitoring European regulatory trends—often a harbinger of rules that eventually reach other markets—this represents a critical insight: cloud provider selection increasingly intertwines with artificial intelligence access and capability, making the market dynamics substantially more complex than historical cloud infrastructure competition.
Amazon's response to the preliminary findings challenged the EU's analytical framework, contending that the regulatory assessment overlooked the genuine diversity of cloud service options available to European customers and competitors. An Amazon Web Services spokesperson argued that the company already operates within Europe's comprehensive regulatory environment, specifically the Data Act, which establishes requirements for data handling and access. The company's statement warned that layering additional Digital Markets Act obligations atop existing regulation risked becoming counterproductive, potentially discouraging the American technology investment that Europe requires to develop competitive digital infrastructure and advanced technology capabilities.
Microsoft adopted a somewhat different defensive posture, redirecting attention toward Google's expanding presence in cloud services. A company representative expressed concern that EU regulators were overlooking the increasing market power wielded by Google Cloud and Google's artificial intelligence division, Gemini, suggesting that regulatory action targeting only AWS and Microsoft Azure while ignoring Google's competitive position would paradoxically distort markets in Google's favour rather than fostering genuine competition. This argument reflects Microsoft's broader competitive positioning against both Google and Amazon across multiple technology domains, with the company asserting that ignoring all three competitors' activities would produce asymmetrical regulatory outcomes.
The investigation's scope also implicitly acknowledges a structural reality of contemporary technology markets: artificial intelligence capabilities have become inseparable from cloud infrastructure, fundamentally reshaping how dominance manifests and perpetuates itself. Traditional cloud competition centred on computing capacity, data storage pricing, and service reliability. The emergence of powerful AI models has introduced new competitive dimensions—exclusive access to training data, integration with frontier AI systems, the ability to offer customers pre-built AI solutions bundled with infrastructure services. The EU's regulatory intervention must therefore address not merely historical cloud market dynamics but a rapidly evolving competitive landscape where the boundaries between infrastructure provision and artificial intelligence deployment grow increasingly blurred.
For Malaysia and other Southeast Asian economies, the EU's regulatory decisions carry indirect but meaningful implications. Many regional technology companies and government agencies increasingly utilise AWS and Azure for cloud infrastructure, making them subject to whatever operational constraints EU regulations impose. More fundamentally, the regulatory approach the EU adopts toward cloud gatekeepers influences how other regulatory jurisdictions conceptualise their own technology governance frameworks. As the EU continues establishing itself as a global standard-setter for technology regulation, its determinations about which companies constitute gatekeepers and what obligations they must discharge help shape the international technology landscape within which Southeast Asian businesses operate.
Both Amazon and Microsoft now possess an opportunity to formally challenge the EU's preliminary findings before the regulator issues a final determination in coming months. The companies will likely argue that their market shares, while substantial, do not translate into the kind of anticompetitive foreclosure that the Digital Markets Act targets, and that competition from Google, Oracle, and smaller cloud providers constrains their ability to exploit dominance. The final regulatory decision will establish precedents for how authorities assess gatekeeping power in infrastructure-layer services rather than consumer-facing platforms, potentially expanding regulatory scope to encompass other foundational digital services previously considered outside regulatory purview. This expansion of the DMA's reach from core platforms to underlying infrastructure represents a fundamental shift in how European authorities conceptualise technology market governance.
