The European Union has taken a major step to expand its regulatory control over the global technology sector. In a preliminary determination, the European Commission informed Amazon and Microsoft that their cloud computing services, Amazon Web Services (AWS) and Microsoft Azure, should be designated as gatekeepers under the landmark Digital Markets Act (DMA).
This regulatory move marks a significant expansion of the EU’s antitrust enforcement. Previously, the bloc used the DMA to target consumer-facing platform services, such as search engines, social media networks, messaging apps, and mobile app stores. Extending these strict competition rules to cloud infrastructure represents a major shift, targeting the underlying digital engines that power the modern economy and serve as the essential foundation for the development of artificial intelligence.
The European Commission’s preliminary findings follow a seven-month market investigation that began in November 2025. By targeting AWS and Microsoft Azure—the largest and second-largest cloud providers in Europe—regulators are attempting to establish a fair, open, and competitive cloud market across the 27-nation bloc. While both companies have the right to defend their positions and respond to the findings in writing, the preliminary designation signals that Brussels is prepared to enforce strict operational limits on the world’s most powerful cloud providers.
The Mechanics of the Qualitative Gatekeeper Designation
To understand the significance of the European Commission’s move, it is necessary to examine how the DMA determines which companies qualify as gatekeepers. Typically, the regulation relies on strict, quantitative thresholds, such as a company achieving a certain level of annual revenue within the European Union, having a specific market capitalization, and serving a minimum number of active monthly business and individual users over several years.
Bypassing Quantitative Thresholds for Critical Infrastructure
Neither AWS nor Microsoft Azure clears the standard numeric benchmarks required for automatic gatekeeper designation under the DMA. This is because cloud infrastructure operates differently from consumer-facing social media or search platforms. While millions of consumers use apps hosted on the cloud, they do not interact directly with AWS or Azure as a consumer-facing platform, making it difficult to apply the law’s standard user metrics to these systems.
Despite these quantitative limitations, the European Commission is utilizing its qualitative authority to propose the gatekeeper designation anyway. Regulators argue that AWS and Azure have achieved such a massive scale, turnover, and operational dominance that they function as essential gateways between businesses and their customers within the internal European market. This qualitative approach allows the EU to regulate critical digital infrastructure based on its market influence and systemic importance, independent of the strict numeric thresholds specified in the original text of the law.
High Switching Costs and the Cloud Lock-In Effect
The Commission’s preliminary findings highlight several structural characteristics of the European cloud market that restrict competition and protect the dominant positions of the two American giants. Chief among these is the presence of high switching costs and “lock-in” effects that make it exceptionally difficult for European businesses to move their data or applications to rival cloud providers.
When an organization builds its software systems on AWS or Azure, it frequently relies on proprietary databases, custom developer tools, and specialized security protocols that are unique to that provider. Moving that data to a competitor, such as a local European cloud provider, requires extensive technical redesigns and significant capital investment.
Additionally, dominant cloud providers often charge expensive data egress fees to customers who want to extract their data from the platform. The Commission argues that these technical and financial barriers create an artificial lock-in effect, preventing European companies from taking advantage of cheaper, more innovative alternatives and allowing the two market leaders to maintain their dominant positions over many years.
The AI Factor: How Generative Tech is Locking in the Cloud Market
The rapid rise of generative artificial intelligence has added a powerful new urgency to the European Commission’s antitrust investigation. AI has emerged as the primary driver of growth in the technology sector, and the development of these advanced models depends entirely on the availability of massive, high-performance cloud infrastructure.
Artificial Intelligence as the New Decisive Procurement Variable
Henna Virkkunen, the EU’s executive vice-president for tech sovereignty, security, and democracy, emphasized this connection, pointing out that cloud services have become a cornerstone of Europe’s economy and a prerequisite for AI. Today, more than half of all businesses in the European Union rely on cloud computing to run their daily operations, and this percentage is set to rise as companies adopt AI-driven automation.
When an enterprise seeks to procure cloud services, the availability of advanced AI tools, pre-trained models, and specialized partnerships has become the decisive factor in their purchasing decisions. Because training large language models requires specialized graphics processors and massive data management systems, companies naturally choose cloud providers that can deliver these advanced capabilities as a packaged service.
By offering integrated suites of AI tools alongside their standard storage and database products, AWS and Azure have successfully positioned themselves as the default destinations for the next generation of digital business.
Funneling AI Demands Back Into Proprietary Ecosystems
The European Commission’s preliminary findings suggest that the two dominant cloud providers are leveraging this AI boom to strengthen their market control. According to regulators, both AWS and Microsoft Azure appear to retain a massive proportion of the surging, AI-driven cloud demand within their own respective closed ecosystems.
Through exclusive partnerships with prominent AI startups and the development of custom, proprietary AI services, the two companies ensure that customers who want to build or use advanced AI models must remain on their cloud platforms. This vertical integration allows them to capture the vast majority of the financial benefits of the AI revolution, preventing smaller, independent European AI developers and cloud providers from competing on a level playing field.
The EU intends to use the DMA to break this cycle, ensuring that the critical infrastructure behind the AI revolution remains open, accessible, and competitive.
Amazon and Microsoft Mount Their Defenses
Both technology giants have responded to the European Commission’s preliminary findings, raising concerns about regulatory overreach and warning that the proposed designations could harm Europe’s own economic competitiveness.
Amazon Points to Regulatory Overlap with the EU Data Act
An AWS spokesperson strongly criticized the Commission’s preliminary assessment, arguing that it disregards the broad choice of cloud services currently available to European customers. The company contends that the European cloud sector is highly innovative and competitive, with declining prices and massive ongoing investments in local infrastructure that are inconsistent with the market characteristics the DMA was designed to address.
Additionally, Amazon pointed to a major regulatory overlap in European law. The spokesperson noted that the European Union already has comprehensive, purpose-built cloud regulation in place through the Data Act.
The Data Act directly addresses the very concerns that the Commission’s investigation examines, including data portability, interoperability, and the lowering of switching costs and egress fees. Amazon argues that adding another heavy, overlapping layer of regulation under the DMA will only undermine European competitiveness, deter critical investments in digital infrastructure, and slow down the pace of technological innovation at a time when European organizations need access to cutting-edge IT services the most.
Microsoft Warns of Ignoring the Rise of Google Cloud and Gemini
Microsoft took a different defensive angle, choosing to highlight the competitive threat posed by its largest global rival, Alphabet. A Microsoft spokesperson stated that while the company continues to engage constructively with the Commission, it remains deeply concerned that ignoring the growing power of Google Cloud and its Gemini AI platform will tilt the market in a harmful and anti-competitive way.
Microsoft argues that by focusing its regulatory attention exclusively on AWS and Azure, the European Commission is creating an uneven playing field. If Google Cloud remains exempt from the strict obligations of the DMA, it could use that regulatory freedom to offer more flexible, unburdened services, allowing it to capture a significant portion of the European market at the expense of its regulated competitors.
This argument highlights the intense rivalry playing out among the “hyperscalers,” as the three dominant American cloud providers scramble to protect their market shares in the face of rising global regulation.
The Road Ahead: Timelines, Compliance, and Market Consequences
The publication of the preliminary findings is not a final order, but it marks the start of a critical legal and regulatory process that will play out over the coming months.
The November 2026 Final Decision and the Six-Month Compliance Window
Amazon and Microsoft now have the opportunity to exercise their rights of defense. Both companies will be granted access to the documents in the European Commission’s investigation file and can submit formal, written responses to the preliminary findings.
The Commission opened its market investigations into the two cloud platforms in November 2025 under a strict 12-month timeline. This means that a final, binding decision on whether to officially designate AWS and Azure as gatekeepers is expected this November.
If the Commission confirms its preliminary findings and adopts a final designation order, both companies will enter a strict, six-month compliance window. During this period, they must fundamentally restructure their cloud operations to align with the strict obligations of the DMA, presenting a detailed compliance plan to European regulators before the rules become legally enforceable in May 2027.
Potential Structural Overhauls for Global Cloud Operations
If the gatekeeper designation becomes final, the obligations imposed under the DMA will require significant changes to how AWS and Azure operate within the European Union. These rules will likely include:
- Prohibiting Self-Preferencing: The companies will be banned from prioritizing their own proprietary software, databases, or AI tools over competing third-party services hosted on their platforms.
- Preventing Unfair Bundling: Cloud providers will not be allowed to force customers to buy auxiliary services, such as specialized security software or advanced developer tools, as a condition for accessing basic cloud storage or computing capacity.
- Mandating Interoperability: AWS and Azure must ensure that their systems are fully interoperable with rival cloud platforms, allowing businesses to run hybrid-cloud setups where data and software applications can move seamlessly between different providers without facing technical or financial barriers.
- Enforcing Data Portability: The companies must provide business users with continuous, real-time access to their data in easily transferable formats, making it simple and cheap for customers to switch to competing local providers.
These strict obligations would represent a massive structural overhaul for the cloud sector, forcing the two market leaders to dismantle the highly integrated, proprietary ecosystems that have powered their profitability for over a decade.
Regulating the Foundation of the Digital Age
The European Commission’s preliminary move to designate Amazon Web Services and Microsoft Azure as gatekeepers under the Digital Markets Act represents a watershed moment for global technology regulation. By choosing to apply the DMA to cloud computing based on qualitative findings rather than standard numeric thresholds, Brussels has sent a clear message to the tech industry: critical digital infrastructure will not be allowed to operate outside the boundaries of fair and open competition.
While the two tech giants have raised valid concerns regarding regulatory overlap with the EU Data Act and the competitive threat from unregulated rivals like Google, the political momentum in Brussels is firmly behind tougher enforcement. As the investigation heads toward its final November deadline, the outcome of this battle will shape more than just the profit margins of Amazon and Microsoft.
It will decide who controls the physical and digital foundation of the European economy, ensuring that the vital cloud systems and AI technologies that will power the next generation of business operate in a fair, open, and competitive market that secures Europe’s technological sovereignty for decades to come.
