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The cloud computing industry is a swiftly growing sector, with many providers hailing it as a “digital revolution” that will render traditional IT business models obsolete within ten years. Although still under development, the range of circumstances to engage in monopolistic and anti-competitive behaviour in the cloud services market are numerous. Suppliers can engage in tying, exclusive dealing, and refusing to share vital information to allow the creation of technically compatible products. Monopolistic behaviour and pricing strategies can also restrict innovation and result in a lessening of competition. This paper reviews the European laws that have a direct effect on competition in the cloud computing industry. In addition to competition law, other areas of law have an impact on competition in cloud services. Merger regulations for example have a direct effect by controlling market concentrations in the cloud and technology industry. Interoperability has emerged as a key policy and legal consideration in cases concerning competition and merger laws.The concept of interoperability has arisen in cloud computing cases, as well as other areas of law that indirectly impact upon openness and competition. These areas include intellectual property and standardisation. As new areas of interest arise that raise enforcement challenges for regulators, the author maintains that current laws are adequate to meet the competition concerns in the diverse cloud services market.
Despite the law lagging behind technological progress, competition law still plays an effective role in ensuring that dominant players do not abuse their position. The continued utility of competition laws is evident in the range and number of investigations into potential platform monopolies and on in-built restrictions on software choices. Additionally, the issue of aftermarkets arising from infrastructure dominance has been recognised and will be a useful analogy for investigations into cloud after-markets. Although competitors will need to prove a relevant market, this may become an easier hurdle to clear as the take-up of cloud computing becomes more mainstream.
The Merger Regulations also operate to provide visibility over all notified mergers that could result in an impediment to competition in a market. The Cisco/Tandberg acquisition is an example of the Commission’s power to investigate the competition effects on cloud communication services, and power to require commitments involving interoperability and licensing of intellectual property.
Decisions such as the 2007 Microsoft interoperability judgment have identified that technical compatibility is essential to continued competition in technology markets. Intellectual property laws, as well as standardisation, affect technical interoperability (and thus competition in cloud services) indirectly. Regulators are able to indirectly promote competition by raising interoperability, through promoting technical and legal standards for example.
Although Big Data raises new challenges for regulators, competition and other laws indirectly affecting competition will continue to be effective and ‘technology neutral’ in their application to the cloud computing industry.