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According to German MEP Andreas Schwab, the digital EU regulation should apply to cloud and AI services to prevent their providers from dominating the market before it’s too late.
Big tech’s cloud and AI services urgently need to be regulated by the EU’s landmark platform regulation the Digital Markets Act, otherwise American and Chinese competitors will dominate the market, German European People’s Party MEP Andreas Schwab said at an event in Brussels on Wednesday.“We need a common European strategy on how to face the digital strength” of China and the US, the lawmaker said, adding: “We want a strong European commitment of the European Commission to make sure that cloud and AI are considered core platform services under the Digital Market Act (DMA) because there is so much potential that if we act now the choice remains for the users and not in the hands of those that can attract investment and thereby can start controlling the market.”There are currently 24 core platform services which fall under the DMA, the EU digital antitrust regulation which entered into force in 2022. They are provided by the so-called “Gatekeepers” – Alphabet, Amazon, Apple, ByteDance, Meta, Microsoft, Booking – designated by the European Commission as big enough to be regulated by the DMA. But cloud and AI services, despite their exponential growth worldwide remain untouched.In the United Kingdom, the market dominance of Amazon and Microsoft in the cloud sector was flagged on Tuesday by the British Competition and Markets Authority (CMA) in the provisional findings of an investigation into the sector launched in October 2023. “We have provisionally found that Amazon Web Services and Microsoft have been generating sustained returns from their cloud services substantially above their cost of capital in cloud services for a number of years,” it said.The CMA also found that large investments can foreclose competitors: “There are also economies of scale, whereby larger cloud providers have lower ongoing costs. The largest cloud providers are making very large investments to expand their services in coming years, and while this investment can have procompetitive effects and benefit cloud customers, it may also deter market entry or expansion by potential rivals.”In the cloud sector, competition among the Tech giant is fierce. Google, which is the third player, after Amazon and Microsoft, filed a complaint last September to the European Commission against alleged anti-competitive practices by Microsoft designed to lock customers into its cloud platform Azure.At another event on Tuesday, Schwab advocated applying the DMA to cloud platform services saying that changing cloud providers “is extremely complicated” because the companies “have invested your data and have accommodated your system.”However while cloud computing services are included among the “core platform services” monitored under the DMA, none have reached the designation thresholds.The artificial intelligence market, in which the Trump administration has announced recently massive investments, and which has seen Deepseek, a new Chinese player, emerge in the last few days, is even less easy for legislators to define for antitrust enforcement purposes. Is it a service or a technology ?“AI is a technology that underpins a wide range of digital applications and services – including some core platform services, such as search engines and social networks,” head of the tech lobby CCIA Europe, Daniel Friedlaender, told Euronews adding: “However, the underlying technology as such cannot be considered a core platform service under the DMA. AI is simply one of many enabling technologies behind a multitude of different services.”Schwab conceded: “Now cloud and AI are interdependent because all AI services are run by the cloud, but at the same time AI is not yet that much part of the gatekeeper services as cloud is already.” But he added that there’s an urgency to consider dealing with AI earlier in the same way as cloud services.American Chatgpt, owned by Microsoft-backed Open AI, leads the market of artificial intelligence. Microsoft’s Copilot and Google’s Gemini are second and third.
