FaceTime, WhatsApp and Zoom could be in the crosshairs of UK communications regulator Ofcom, which has announced an investigation into cloud services, messaging apps and smart devices. It’s just the latest in a global sequence of regulatory investigations that could impact Big Tech.
The UK looks up in the clouds
The UK regulator says it intends to look into the positions of Amazon, Microsoft and Google in the $ 17 billion UK cloud services market. These three “hyperscalers” represent the vast majority (81%) of that market.
Businesses have become much more trusted on cloud services during the COVID-19 pandemic, and Gartner predicts that 45% of IT spending will go to 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 performing well, there can be negative impacts on businesses and ultimately on consumers, due to higher prices, lower quality of service and reduced innovation.”
Regulators in other nations will no doubt monitor the progress of the investigation as they try to maintain their level of competitive playing fields.
The newly announced study will include a look at digital services like 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 is likely to take months and it is possible for business models to evolve before any further action is taken, if any.
Why does Ofcom investigate?
Ofcom regulates the UK communications industry which means it has to monitor the disruptive changes emerging in the industry. It is indisputable that technology now affects daily life on numerous 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, “Selina Chadha, Ofcom’s director of connectivity, said in a statement.
The investigation aims to assess the effectiveness of the functioning of the markets and whether the dominant position of the market is hindering development. The regulator will also seek to identify current market trends to identify and protect against probable competition problems.
“That is why we are embarking on a program of work to look into these digital markets, identify any competition concerns and make sure they are working well for the people and companies that rely on them,” he said.
Providers must receive the message
WhatsApp, FaceTime, and Zoom can all expect to see the probe explore the extent of their business, how it affects competition, and its effect on the overall market.
But the biggest suggestion of a particular concern visible in the Ofcom press release is that the regulator specifically states, “We also want to understand if any limitations to their ability to interact with each other raise 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 look at the business models of the major players in this market.
The appeal from companies that could be included in this investigation is vast. Big Tech companies including Microsoft, Google, Apple, Amazon and Meta will be part of it, but device manufacturers like Samsung, Sony or LG will too.
While it’s too early to predict how these investigations will go, it appears regulators are building new barriers to limit tech companies that rely on the law for a competitive advantage. At the same time, other issues may be involved in the effort, including the protection of personal privacy, particularly when large portions of consumer data resulting from the use of these services become commodified.
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