FaceTime, WhatsApp and Zoom could be in the crosshairs of British communications regulator Ofcom, which has announced an investigation into cloud services, messaging apps and smart devices. This is just the latest in a global series of regulatory investigations that could impact Big Tech.
UK looks up in the clouds
The UK regulator said it plans to review the positions of Amazon, Microsoft and Google in Britain’s $17 billion cloud services market. These three “hyperscalers” represent the vast majority (81%) of this market.
Businesses have become much more dependent on cloud services during the COVID-19 pandemic, and Gartner predicts that 45% of IT spending will be on public cloud by 2026, for example.
Ofcom’s investigation will extend to how the cloud is used. “The cloud has become an essential part of how products are delivered to telecommunications users, as well as viewers and listeners of TV, radio and audio content,” Ofcom said. “If we find that a market is not functioning well, there can be negative impacts on businesses and ultimately consumers through higher prices, lower quality of service and of reduced innovation.”
Regulators in other countries will no doubt be watching the progress of the investigation as they seek to maintain their own competitive playing field.
The recently announced study will include an overview of digital services such as WhatsApp, Zoom and FaceTime, as well as the smart speaker market; the latter will draw many names into the picture, including, no doubt, Apple’s HomePod.
It is important to note that the study will likely take months and it is possible that business patterns will change before any further action takes place, if at all.
Why is Ofcom investigating?
Ofcom regulates the communications industry in the UK, which means it must monitor emerging disruptive changes in the sector. It is undeniable that technology is now impacting everyday life on many levels, including telecommunications and media distribution.
“The way we live, work, play and do business has been transformed by digital services. But as the number of platforms, devices and networks that deliver content continues to grow, so do the technological and economic issues facing regulators,” said Selina Chadha, director of connectivity at ‘Ofcom, in a statement.
The survey aims to assess how well markets are currently functioning and whether market dominance is hampering development. The regulator will also seek to identify current market trends in order to identify and protect against likely competition concerns.
“That’s why we’re launching a program of work to review these digital marketplaces, identify any competition issues and make sure they work well for the people and businesses that depend on them,” she said.
Suppliers must understand the message
WhatsApp, FaceTime and Zoom can all expect to see the probe exploring the extent of their business activity, its impact on competition and its effect on the overall market.
But the biggest suggestion of a particular concern visible in Ofcom’s press release is that the regulator specifically states: “We also want to understand whether any limitations on their ability to interact with each other raise any potential concerns. “
‘Hey Siri, are you a keeper?’
Digital assistants, connected TVs and smart speakers are also getting attention. The regulator intends to analyze consumer behavior, consider future developments and examine the economic models of the main players in this market.
The roll call of companies likely to be included in this survey is wide. Big tech companies like Microsoft, Google, Apple, Amazon and Meta will be among them, but so will device makers like Samsung, Sony or LG.
While it’s too early to predict how these investigations will pan out, it looks like regulators are building new fences to coerce tech companies into leaning into the law for competitive advantage. At the same time, other issues could be brought into the effort, including privacy, especially as vast swathes of consumer data from the use of these services become commoditized.
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