Amazon (AMZN) Stock; Falls Amid EU Cloud Investigation

TLDRs:

• Amazon shares dropped nearly 1% after the EU launched a probe into AWS under DMA rules.
• Microsoft Azure also faces scrutiny as regulators assess cloud competition and gatekeeper status.
• Recent AWS and Azure outages triggered concern over market dominance and business dependence.
• EU regulators aim to finalize cloud sector rules within 18 months, impacting large providers.

Amazon and Microsoft saw market jitters Thursday after the European Union announced an investigation into their cloud services.

The European Commission is examining Amazon Web Services (AWS) and Microsoft Azure to determine if stricter oversight is needed under the Digital Markets Act (DMA). While AWS and Azure were previously exempt from DMA “gatekeeper” classification due to enterprise user counts, regulators are reconsidering whether these platforms act as essential gateways between businesses and consumers.

Investors reacted immediately, with Amazon’s stock slipping nearly 1% in intraday trading. Microsoft shares also showed minor declines, reflecting broader market concern over regulatory intervention in the cloud sector.

Amazon.com, Inc., AMZN

Outages Amplify Regulatory Scrutiny

The probe, announced Tuesday, follows a series of high-profile service disruptions that highlighted cloud dependency risks. AWS experienced a 15-hour outage last month, affecting major clients such as Apple and McDonald’s. Azure faced its own disruptions in October, causing travel delays for Alaska Airlines passengers.

Regulators are reviewing whether these outages, combined with the platforms’ market dominance, warrant stronger rules to protect businesses and consumers.

The inquiry will explore interoperability barriers, limited access to user data, and the potential anti-competitive effects of service bundling.

Implications for Gatekeeper Status

If AWS and Azure are designated as DMA gatekeepers, they would face significant operational obligations. These include enabling third-party interoperability, sharing user data with other providers, and halting self-preferencing in service rankings.

The EU is particularly focused on how enterprise contracts have historically complicated user counts, which previously exempted the two platforms from DMA thresholds.

Currently, U.S. hyperscale cloud providers hold more than 65% of the EU market, while European providers’ share has declined sharply from 26% in 2017 to 10% in 2020. Regulators will examine whether Amazon and Microsoft unfairly restrict competition through contract terms, bundling, and switching fees, despite recent voluntary reductions in such charges.

Preparing for Future Compliance

The investigation coincides with upcoming EU regulations aimed at increasing market fluidity. The Data Act mandates that cloud providers eliminate switching charges by January 12, 2027, and ensure data portability in standardized formats. Multi-cloud management and compliance vendors can anticipate rising demand for migration tools as enterprises prepare for this transition.

Banks and insurers face additional pressure from the Digital Operational Resilience Act (DORA), which sets cybersecurity and incident resilience standards. Companies must develop ICT third-party risk strategies, complete with exit plans and transition processes. Solutions that maintain continuity during platform switches and provide audit-ready compliance will likely see strong market uptake.

Amazon expressed confidence in market choice and innovation, while Microsoft confirmed full cooperation with EU regulators. The European Commission aims to conclude its inquiry within 12 months, with a final decision on cloud sector regulation expected within 18 months.

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