Cloud computing market is still in its constantly changing and developing phase. Therefore, the occasionally arising competition issues are not easily addressed by the current competition law neither on global, nor on local/national scale. Even though, the cloud computing services are becoming a vital part of digital services and businesses, due to the innovative nature of the information technology it is early to declare that the market positions of the participating/competing parties are set. They can be overturned in a day with a new, more efficient technical solution.
Generally, competition law prohibits the agreements that intended or might result in distortion or elimination of the competition on the relevant market. Furthermore, the abuse of dominant market position is also prohibited. However, the definition of the relevant market and hence the dominant position in this case is challenging. The US antitrust law introduced the offence of attempting to monopolise, which allows the intervention of the authorities before the market dominance is achieved. This serves as a preventive measure before the significant distortion occurs on the relevant market. Unfortunately, the European legislation does not have a similar tool for intervention in order to maintain a ‘healthy’ competition on the internal market. Nevertheless, the European Commission may try to juggle with the definition of the relevant market in order to find dominant a cloud provider who makes attempts to abuse its position or to increase its dominance via unfair business practices.
In order to manage the healthy development of the cloud services market, the Commission recognised the potential benefits of certain prescriptions (such as open standardisation; fair, reasonable and non-discriminating or royalty-free licensing; cloud interoperability; data portability; transparency) that promote the competition in this sector. For example, the integration of desired business and technical standards into the governmental procurement procedures (like interoperability with external cloud services and applications; standardised file formats) are a big incentive for cloud providers to meet such market behavioural expectations. The definition and identification of the scope of desired business and technical standards are performed not only by the official standardisation organs (like ESO in EU, and ANSI in US), but by several other semi-formal, informal organisations, like the Open Cloud Consortium. Their work and contribution to cloud standards is a very valuable input. However, any forum that includes active market participants (id est is influenced by them) should be handled with care, since it may not be reflecting the interests and standards of smaller competitors. Therefore, the introduction of standards that do not reflect the technical and business models of all competitors may result in undesired distortions on the relevant market. Standards identified by all relevant market participants (including authorities, business customers and consumers) would be the most favourable.
In addition, such soft laws as the Cloud Industry Forum’s Code of Practice for Cloud Service Providers are playing an important role in the competition. Irrespectively whether the contracting party is a consumer or a business customer, the cloud service providers are expected to reveal openly prior the conclusion of a contract any technological limitations and information which are necessary for the customer to make a reasonable decision about the purchase. This way the potential customer has a chance to consider potential risks of lock-in deriving from any limitations of the given cloud service.
Besides the information transparency and technological open standardisation that prevents the technological lock-in of users into one certain cloud service, the indirect effect of consumer protection and data protection law provisions ensure that cloud providers need to enable data portability for its customers. Thus, it becomes easier to switch a cloud provider and this will increase the competition, since cloud providers will not be able to take for granted their user-base. Such quick migration may be able to outbalance the network effect of a dominant market participant when a smaller competitor introduces an attractive innovation.