French Antitrust Watchdog Goes For The Clouds

July 15, 2022
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The Autorité de la concurrence has published a new consultation seeking how better to regulate cloud providers as it joins fellow European regulators in scrutinising US companies’ market power on the continent.

The Autorité de la concurrence has published a new consultation seeking how better to regulate cloud providers as it joins fellow European regulators in scrutinising US companies’ market power on the continent.

Cloud services are a big business, and are used by a majority of companies now, including payment firms.

In a recent payments modernisation report, Mastercard noted “how exponential gains to computing processing power and communications bandwidth have made it possible to deploy to the cloud securely for increasingly complex and critical payment application workloads”.

In 2021 with its partners, the payment firm moved several services to the cloud in a move intended to open up opportunities for contactless payments.

Visa too has invested in cloud technology to improve the payments journey it can provide to merchants.

Yet, cloud computing technology is increasingly facing probes from regulators.

Launched in January, the Autorité de la Concurrence has now taken on board feedback from regulators, such as the European Banking Authority, and is looking for responses from the public before drawing a conclusion.

The competition regulator seeks to assess whether certain players are likely to hold particular positions and competitive advantages, especially with regard to their investment capacity, their access to certain infrastructures and their ability to differentiate themselves or to offer a wide range of services.

Several major players, for example, could combine several advantages that they have, while benefiting from their well-established position in digital markets to promote their expansion.

The investigation analyses certain practices implemented or likely to be implemented in the cloud sector to assess whether some of them could restrict the development of competition.

The consultation delves into the vertical integration of certain players in cloud markets, looking at how the existence of potential conglomerate effects could also raise competition concerns.

The consultation is looking at risks associated with anti-competitive agreements and merger practices that may exist in the sector, and several technical practices are discussed to assess the obstacles to customer migration and to the use of several cloud service providers.

The regulator has also observed a set of business practices, particularly in relation to contractual and/or pricing. These may contribute to increasing barriers to entry or expansion in certain markets or to extending a player's market power.

Stakeholders have until September 19 to respond to the Paris-based regulator’s consultation.

Beyond competition law, cloud service providers are due to come into scope under the Digital Operational Resilience Act (DORA) in the EU. It is expected that firms will be required to be in compliance with this act by 2024.

DORA creates a regulatory framework on digital operational resilience whereby all firms need to make sure they can withstand, respond to and recover from all types of ICT-related disruptions and threats, including with their outsourcing partners for technologies such as cloud computing.

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