The UK Government Cloud Strategy, presented in 2011, sought to promote digital transformation in the public sector via a public-cloud first initiative. A recent report by the Competition and Markets Authority reveals significant failures in the cloud market, indicating it is impeded by a duopoly resulting in high switching costs and a lack of competition. Less than 1% of users change providers annually, leading to economic entrapment. Moreover, Microsoft's recent significant price increases exemplify the problem, leading to concerns about stifled competition and the future of AI development in the UK.
The UK Government Cloud Strategy, established in 2011, aimed to drive digital transformation and empower public sector organizations through a 'public-cloud first' approach, emphasizing openness and competition.
Regulatory insights reveal that the cloud market is dominated by a duopoly, leading to severe market inefficiencies and customer entrapment, particularly seen with Microsoft's recent price increases.
Less than 1% of customers switch cloud providers each year, largely due to high switching costs and proprietary systems that create economic entrapment rather than competitive choice.
This situation not only stifles competition but also jeopardizes the UK government's ambition to be an AI leader, as continued reliance on two major hyperscalers limits innovation and capability.
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