Two years ago, the Department of Communications and Digital Technologies (DCDT) nearly nailed the problem.
The 2024 National Policy on Data and Cloud tasked the Competition Commission to “identify proactive preventative measures to ensure a fair and competitive market”, and demanded transparency from cloud operators “regarding data portability and interoperability costs”.
This week, the UK's Competition and Markets Authority nailed a big part of the solution to that problem: making AWS and Azure offer good terms for migrating a single service – not just entire contract packages – with decent window periods, continuity guarantees during egress and cost-price data for the move.
It is complicated in the detail, of course, and there are concerns about malicious compliance and suchlike. There will be drama and edge cases and litigation, because that is just how it goes when you are dealing with contracts worth tens of billions of rands.
UK customers now have standard egress terms with no hidden fees or (in theory) manufactured pitfalls.
But enterprise customers in the UK, at least in theory, now get true freedom to mix-and-match between hyperscalers, running services on whatever cloud is most cost-effective for the specific use case.
The DCDT was rightfully worried about cloud operators spelling out exit terms at the beginning of a contract, saying customers could be locked in without noticing it. But awareness of toxic terms only takes you so far. UK customers now have standard egress terms with no hidden fees or (in theory) manufactured pitfalls. The hyperscalers can keep those customers by providing some unique valuable service, or they can keep them through price competition, but that is it. If they can't innovate on the product or keep it cheap, they'll bleed.
And thus the market will work as it is supposed to.
The big remaining distorting factor is bundling, and that's why Microsoft will still face a UK investigation – along lines that will sound familiar if you've been following its troubles in South Africa. Regulators seem to be universally worried that Microsoft will, well, perhaps not lock businesses into Azure overtly, but make Azure's lure irresistible for those in the Office ecosystem in an unfair way.
(Microsoft says it has experience dealing with antitrust concerns and is happy to work with regulators because that is good for everyone, including Microsoft.)
To be fair, vertical integration has some inherent advantages. Also, it's not just Microsoft. Google is looking more and more like a full-stack enterprise provider, just minus the legacy, on-prem-heavy environments and some bits such as grown-up ERP and CRM. If a lot of enterprises choose to stick to either Google or Microsoft, that is not necessarily a sign of market failure.
Such future arguments aside, big cloud users in the UK are looking forward to more freedom and better prices. The European Union is pushing in the same direction. And the rule with US regulators, especially these days, is that you had better give them most-favoured nation status, because if they suspect you offer better trade terms elsewhere, you're toast.
South Africa will have to wait a little longer, but not forever.
There is an unspoken rule that a win such as this one from the UK comes with a period of exclusivity. This week the vendors were talking about UK customers this and UK rules that. Next week, UK politicians get to brag about what the new rules will do for UK growth. Then you need a little more time to pass before any other country gets the same terms, so that the UK can claim to have set a precedent that is being followed rather than seem as if it was riding a wave not of its own making.
The vendors have another reason to delay replicating such rules elsewhere immediately. They don't want a quick fall of dominoes; they want a measured pace of change they can manage. They frame this as respect for local law and custom that may require bespoke solutions, which you can take with as much salt as you like.
But there is now gravity at work, an inexorable pull towards contracts and service terms that genuinely enable multicloud and cloud competition, everywhere.
South Africa's regulators will just need to give a carefully calibrated shove at the right time to get it done.
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