EU moves to designate AWS and Azure as gatekeepers under DMA

Key Takeaways

• The European Commission has informed Amazon and Microsoft that AWS and Azure should be designated gatekeepers under the DMA
• This designation would apply despite neither cloud service meeting the DMA's standard quantitative thresholds
• Both companies argue the move could harm European competitiveness and ignore growing competition from Google Cloud

The European Commission has told Amazon and Microsoft their cloud businesses should be classified as gatekeepers under the Digital Markets Act, a move that would impose strict interoperability and competition rules on AWS and Azure. The preliminary finding, announced June 24, marks the first time Brussels has sought to apply the DMA to cloud infrastructure despite the services not meeting the law's standard size thresholds.

AWS holds roughly 32% of the global cloud market. Azure follows at about 23%. Together they dominate European enterprise infrastructure. The Commission's argument: these two platforms function as critical gateways between businesses and their customers in the EU, regardless of whether they clear the DMA's numerical bars.

Why doesn't standard DMA math apply here?

The Digital Markets Act, which took effect in 2023, sets clear criteria for gatekeeper status: 45 million end users, 10,000 business users in Europe, and €7.5 billion in annual EU revenue for three consecutive years. AWS and Azure apparently fall short on at least one of those metrics.

But the DMA includes a qualitative override. The Commission can designate a service as a gatekeeper if it holds "an entrenched and durable position" even without hitting the numbers. That's the path Brussels is taking. The regulator points to years of market leadership, outsize infrastructure investments, and the surge in AI-related cloud demand that has widened the gap between these two providers and everyone else.

What would gatekeeper status require?

If the designation sticks, AWS and Azure would face obligations familiar to Apple, Google, and Meta under the DMA. They would need to ensure data portability, allow customers to switch providers without technical lock-in, and avoid self-preferencing their own services on their platforms. Non-compliance can trigger fines of up to 10% of global revenue, with daily penalties reaching €10 to €20 million for ongoing violations.

Amazon and Microsoft already carry gatekeeper labels for other services. Amazon's marketplace and Microsoft's Windows and LinkedIn are already subject to DMA rules. Cloud was the remaining major gap.

How are AWS and Microsoft responding?

Neither company is happy. Amazon called the findings a threat to European investment and innovation. The company pointed to a Copenhagen Economics study it commissioned, which found more than 200 active cloud providers in Europe holding a combined 15% market share since 2022. AWS argues the EU already regulates cloud through the Data Act, and layering DMA requirements would harm competitiveness.

Microsoft's response took a different angle. A spokesperson said the company remains engaged "constructively" with the Commission but raised concerns about regulatory blind spots. "We remain concerned that ignoring the growing power of Google Cloud and Gemini will tilt the market in a harmful way," the statement read. Translation: if you're going after us, don't let our biggest competitor off the hook.

Where is Google Cloud in this?

Absent, for now. Google Cloud holds about 11% of the global market, third place behind AWS and Azure. The Commission's announcement did not mention any preliminary findings regarding Google's cloud infrastructure. Microsoft's public complaint makes clear the company sees this as an uneven playing field.

The omission raises questions about the Commission's logic. If market position and AI demand are the criteria, Google Cloud's integration with Gemini and its aggressive enterprise push would seem relevant. Whether Brussels plans a separate inquiry or views Google's share as insufficient remains unclear.

What happens next?

Both Amazon and Microsoft now have the opportunity to respond formally to the Commission's preliminary findings. This is not a final ruling. The companies will submit arguments, the Commission will review them, and a final decision could take months. Appeals to European courts would follow any designation.

For fintech firms and enterprises running critical workloads on AWS or Azure, the practical effects remain distant. Even if gatekeeper status is confirmed, compliance timelines typically stretch 12 to 18 months. The more immediate concern is strategic: how much will this regulatory uncertainty influence procurement decisions and multi-cloud strategies?

Frequently Asked Questions

What is a gatekeeper under the Digital Markets Act?

A gatekeeper is a large digital platform that the EU considers a critical gateway between businesses and consumers. Gatekeepers must follow strict rules on interoperability, data portability, and fair competition.

Does AWS or Azure currently violate the DMA?

No. The Commission's announcement is a preliminary finding that they should be classified as gatekeepers. No violations have been alleged at this stage.

How would DMA gatekeeper status affect cloud pricing?

Directly, not much. The DMA focuses on competition and interoperability rather than price controls. Indirectly, easier switching could increase competitive pressure on pricing over time.

Why isn't Google Cloud included in this designation?

The Commission has not explained the omission. Google Cloud's smaller market share, roughly 11%, may place it below the threshold the Commission considers dominant, though Microsoft has publicly criticized the gap in treatment.

When would new rules take effect for AWS and Azure?

If designated, the companies would have several months to comply. Final decisions on gatekeeper status typically allow 12 to 18 months before enforcement begins.

Source: PYMNTS | / PYMNTS