Will UK Data Centres Shift to Hybrid Cloud Amid CMA probe?
UK organisations are moving away from single-provider cloud infrastructure amid regulatory scrutiny over market concentration, according to new research from Civo.
The findings suggest that sovereignty, cost control and operational resilience are now driving infrastructure strategies in data centres across the UK.
The report comes as the UK’s Competition and Markets Authority (CMA) prepares to deliver its final verdict on whether the dominance of Amazon Web Services (AWS) and Microsoft in the £9bn (US$11.9bn) UK cloud market is undermining competition.
The investigation has drawn renewed attention to egress fees, technical barriers and software licensing terms that make multicloud adoption more complex for data centre operators and their enterprise clients.
Growing demand for sovereignty and visibility
Civo’s survey of more than 1,000 UK IT leaders shows that 60% of organisations no longer rely on a single cloud provider.
A total of 78% now prioritise sovereignty when choosing infrastructure partners, reflecting broader concerns around data location, access control and governance.
Yet despite this shift, only 35% of respondents report full visibility into where their cloud data is stored and managed.
Mark Boost, CEO of Civo, says vendor lock-in remains a persistent problem.
Between licensing restrictions, integration hurdles and long-standing vendor lock-in, it's just not as easy as flipping a switch.
“I speak to founders and IT leaders all the time who tell me the same thing: they know they need to move away from relying on a single provider, but they feel stuck,” says Mark.
“Between licensing restrictions, integration hurdles and long-standing vendor lock-in, it's just not as easy as flipping a switch.”
Hybrid cloud models are emerging as a preferred route for operators seeking to balance performance with governance.
According to the research, 31% of UK firms are now using hybrid infrastructure that combines public cloud with private or on-premises environments.
A further 29% are pursuing multicloud strategies with multiple public cloud providers.
CMA scrutiny focuses on licensing and lock-in
The CMA’s provisional findings, released in January, noted that AWS and Microsoft control between 60% and 80% of the UK cloud market.
The regulator estimates this could lead to UK businesses overpaying by £430m (US$570m) a year due to limited competition.
In particular, the CMA raised concerns over Microsoft’s software licensing practices.
The regulator found that running Microsoft software like Windows Server and SQL Server on Google Cloud or AWS is often more expensive than on Microsoft’s own Azure platform.
These pricing structures, it concluded, may restrict effective competition.
Microsoft has disputed this assessment, arguing that AWS and Google both have the scale and margins to compete. It cited their combined US$80bn capital expenditure to support its position.
However, AWS and Google have pushed back, with AWS stating that “one exception to the well-functioning nature of the market for IT services is Microsoft’s licensing practices”.
The CMA may now use new powers under the Digital Markets, Competition and Consumers Act to impose binding conduct rules on providers with Strategic Market Status.
Penalties for non-compliance can reach up to 10% of global revenue.
Hybrid adoption highlights changing priorities
For many organisations, the move to hybrid infrastructure is not just a technical choice but a response to compliance pressures and geopolitical risk.
Mark says customers want more than cloud agility — they want control.
“What we’re seeing now is a real shift in how organisations think about infrastructure,” he says.
“It’s not just a technical decision anymore. They want control and the ability to stay resilient in the face of geopolitical uncertainty – that starts with sovereignty.”
- AWS and Microsoft control 60-80% of the £9 billion UK cloud market, ahead of Google
- UK businesses may overpay by £430 million annually due to limited competition, CMA estimates
- Only 35% of organisations have full visibility into where their cloud data is stored and governed
He adds that while multicloud can offer flexibility, it also introduces challenges around compliance, support fragmentation and integration.
“What’s becoming increasingly clear is that hybrid cloud offers a more practical path forward,” Mark adds.
“It gives businesses the flexibility they’re looking for, without the operational complexity and fragmentation that often come with multicloud.
“But to fully realise the benefits of hybrid cloud, businesses need platforms that are open by design, interoperable and built with transparency at their core.”
