Brussels has fired its boldest shot yet at the cloud computing duopoly. On June 25, 2026, the European Commission informed Amazon and Microsoft that its preliminary investigation concluded both Amazon Web Services and Microsoft Azure meet the criteria to be classified as “gatekeepers” under the Digital Markets Act. The move opens the door to sweeping new rules that could reshape how businesses buy, use, and switch cloud services—and strikes at the heart of concerns over vendor lock-in and the tightening grip of AI infrastructure.

The notification, which came via Statements of Objections sent to both companies, marks the first time the EU has applied its landmark competition framework to the infrastructure layer of the digital economy. Until now, the DMA had focused on consumer-facing platforms—search, social media, app stores, and advertising. Extending it to cloud computing signals a profound regulatory shift, and one that both AWS and Azure fought hard to avoid.

Here is what the designation means, why it happened, and what comes next for the hyperscale cloud market.

The Path to June 25: How the EU Built Its Case

The European Commission’s cloud investigation began quietly in late 2024, spurred by complaints from European cloud providers, business trade associations, and even some large enterprise customers. They argued that AWS and Azure, together commanding over 55% of the global public cloud market, used their market power to lock in customers through technical barriers, restrictive licensing, and opaque egress fees—practices that undermined the EU’s stated goal of a competitive data economy.

The DMA provides the legal framework: companies designated as gatekeepers provide core platform services, have a durable and entrenched market position, and are active in multiple EU countries while meeting quantitative thresholds—EUR 7.5 billion annual turnover in the EU or a market cap of at least EUR 75 billion, plus more than 45 million monthly active end users or 10,000 business users in the bloc. AWS and Azure easily surpass these numbers.

But the Commission went further. In its preliminary findings, it argued that cloud infrastructure is now an “essential facility” for digital business, akin to electricity grids or telecommunications. The lock-in mechanisms are not accidental, it said, but part of a deliberate strategy: high data transfer fees, minimal interoperability standards, and tie-ins with proprietary AI services create a “cloud trap” from which even sophisticated enterprises struggle to escape.

Margrethe Vestager, the EU’s competition chief, did not mince words. “Cloud has become the backbone of Europe’s economy. When two companies control the pipes, storage, and increasingly the intelligence that runs our factories, hospitals, and financial systems, they must play by common rules. Today we are saying: the time has come.”

What Gatekeeper Status Would Force AWS and Azure to Do

Designation under the DMA is not a punishment; it compels behavioral change. The Act lists a set of obligations and prohibitions designed to open markets. For cloud gatekeepers, the most impactful would likely include:

  • Ban on data transfer fees: Gatekeepers cannot charge businesses to move their data to an alternative provider. AWS and Azure currently levy per-gigabyte egress charges that can run into millions for large-scale migrations. Eliminating them would remove a major psychological and financial barrier to multicloud and switching.
  • Interoperability mandates: Gatekeepers must allow third-party services and rival clouds to interoperate with their own core platform services. In practice, this could mean standardizing APIs for compute, storage, and identity management, and enabling seamless multicloud management tools without fear of performance penalties.
  • No self-preferencing of AI and data services: Perhaps the most forward-looking provision. The Commission made clear that cloud gatekeepers cannot privilege their own AI offerings—such as Azure OpenAI Service or Amazon Bedrock—over competitors that rely on their infrastructure. That includes not making their own models train faster or cheaper on their clouds, and not bundling AI services in ways that foreclose rival AI platforms.
  • Prohibition on tying cloud with other services: AWS and Azure cannot require customers to use their other products (productivity suites, operating systems, databases) as a condition for accessing the cloud infrastructure. For Microsoft, this directly challenges the tight integration of Azure with Windows Server, Active Directory, and Microsoft 365.
  • Transparency and fairness obligations: Gatekeepers must provide business users with clear, granular data about how their services operate, including performance metrics and change logs. Rating and review mechanisms must be fair and non-discriminatory.

Failure to comply can result in fines of up to 10% of global annual turnover, escalating to 20% for repeated infringements. For Amazon and Microsoft, that would translate to tens of billions of euros.

The Lock-in Paradox: Why Break-up Calls Are Growing Louder

The EU’s focus on lock-in reflects a growing consensus that cloud competition is broken. In theory, cloud architecture uses standard hardware and open-source software; swapping one virtual machine for another should be trivially easy. In practice, enterprises report that once they commit to a provider, the cost and complexity of leaving skyrocket.

Data gravity is the main culprit. As companies accumulate petabytes of data in proprietary analytics, AI training pipelines, and serverless workflows, they become entangled in the provider’s ecosystem. AWS’s S3 storage and Azure’s Cosmos DB are not simple to replicate elsewhere. Egress fees make it cheaper to stay put, and discounts for upfront commitments—reserved instances, savings plans—lock in spending for years.

Then there is the AI wildcard. Both Amazon and Microsoft have invested billions in foundation models and developer tooling. Copilot for Azure and Amazon Q are becoming the default interfaces for building, deploying, and managing applications. If an enterprise relies on these tools, a cloud switch means retraining staff, rewriting automation, and losing productivity. Lock-in is no longer just about infrastructure; it is cognitive and operational.

The European Commission is keenly aware of this. In its investigation, it cited internal case studies of European manufacturers that attempted to migrate to European cloud alternatives but abandoned the effort after finding that 70% of their applications would require substantial refactoring. One automotive supplier reported that moving 5 petabytes out of AWS would cost over EUR 2 million in egress fees alone—nearly as much as the annual cloud bill.

David Heinemeier Hansson, CTO of 37signals and a vocal cloud repatriation advocate, called the EU action “long overdue.” “The cloud is a velvet cage. Gatekeeper rules are the only way to make sure the emergency exits aren’t welded shut.”

The AI Dimension: A New Frontier for Antitrust

The Commission’s inclusion of AI services in the gatekeeper probe is a landmark moment. For the first time, regulators are treating the cloud infrastructure–AI nexus as a single competitive market. Both AWS and Azure have moved aggressively to monetize AI by layering proprietary models and development frameworks atop their IaaS foundation.

Microsoft’s exclusive partnership with OpenAI, through which Azure is the sole cloud provider for ChatGPT and other models, has drawn particular scrutiny. Critics argue the arrangement allows Microsoft to entrench Azure as the on-ramp to advanced AI, while also benefiting from billions in revenue that cycle back into the Azure ecosystem. Amazon, meanwhile, has poured resources into its Titan model family and the Bedrock service, which integrates third-party models but runs them on AWS.

Under gatekeeper rules, both companies would face strict limitations on using their cloud dominance to steer customers toward their own AI services. Mandatory interoperability could force AWS and Azure to allow customers to train and run models from rival providers with the same performance, cost, and convenience as their own. It might even require them to offer AI services as standalone products decoupled from the underlying cloud.

This prospect alarms the incumbents. In meetings with regulators, both companies argued strenuously that AI is an emergent, highly competitive field and that the DMA’s digital-era regulations would stifle innovation. Microsoft’s Brad Smith warned that forced decoupling “would set European AI back a decade,” while Amazon’s Matt Garman emphasized that the cloud market is contestable and that customers routinely use multiple providers.

EU officials, however, note that the same arguments were made by Google and Meta regarding search and social media—and that the DMA has demonstrably increased competition in those sectors without destroying innovation.

Industry Reaction: European Champions Cautiously Optimistic

Europe’s own cloud providers—OVHcloud, Scaleway, Deutsche Telekom/T-Systems, and others—welcomed the announcement with guarded enthusiasm. For years, they have lobbied for an end to what they call “hyperscaler lock-in by design.”

“This is a turning point,” said Octave Klaba, founder of OVHcloud. “If implemented fully, gatekeeper rules will allow European companies to truly shop around for cloud services based on merit, not inertia. The €10 billion EU cloud market can finally become a real market.”

But many remain skeptical about enforcement. The DMA has struggled with implementation in other sectors. Apple and Google have repeatedly challenged designations in court, and regulators have been slow to issue concrete compliance guidelines. For cloud, the technical complexity is an order of magnitude greater: defining what “interoperability” means for a globally distributed storage service is far harder than for a messaging app.

“The devil is in the technical details,” said a senior engineer at a major European bank, speaking on condition of anonymity. “I can’t just flip a switch and move my data from S3 to OVH without months of work. Even if egress fees go away, the tooling gap is immense. The DMA can’t just wish a competitive ecosystem into existence.”

Large enterprise customers are also divided. Some view the probe as a welcome lever to negotiate better terms. Others fear that forced standardization will slow down innovation and lead to a “lowest common denominator” cloud experience that hampers their own digital transformation.

What Happens Next: A Timeline to Compliance

The June 25 Statements of Objections are not final decisions. Both companies now have 12 weeks to respond in writing and request an oral hearing. After reviewing the defense, the Commission will issue a final decision—likely in early 2027—designating AWS and Azure as gatekeepers. From that point, they will have six months to propose compliance measures and prove they meet the DMA’s requirements.

Crucially, the Commission can also impose interim measures immediately if it believes harm to competition is acute. Prohibiting data egress fees or mandating API access could become enforceable before the final decision.

Amazon and Microsoft are expected to mount a legal challenge. Both have deep pockets and long experience with EU antitrust procedures. They may argue that the cloud market is not indispensable because alternatives (private data centers, colocation, and smaller providers) exist; that AI is a separate, nascent market; and that the DMA’s thresholds are arbitrary and outdated. A protracted battle in the EU courts could delay compliance for years.

The political dimension is equally potent. By 2026, the EU’s digital sovereignty agenda has become a cornerstone of economic policy, supported by conservatives, social democrats, and greens alike. Attempts by US tech giants to undermine the rules will fuel transatlantic tension and could invite retaliatory measures from the US government—though Washington’s own antitrust enforcers are increasingly aligned with Brussels on curbing Big Tech power.

The Broader Implications: A Global Regulatory Precedent

The EU’s move is already reverberating beyond its borders. The UK’s Competition and Markets Authority, which conducted its own cloud market investigation in 2025, said it “will study the EU’s findings closely” and is prepared to open a parallel designation process under its own digital markets regime. Australia and Japan have signaled interest, and even the US Federal Trade Commission, under Lina Khan’s continued leadership, has reportedly revived earlier probes into AWS and Azure bundling practices.

If the EU succeeds, the cloud industry could undergo its biggest structural shift since Amazon launched EC2 in 2006. A world where egress fees are banned, APIs are standardized, and AI is a portable service would advantage smaller competitors, empower enterprise buyers, and potentially shrink the hyperscalers’ margins. For Microsoft, which has woven AI so deeply into Azure that the two are nearly inseparable, compliance would require nothing less than a rearchitecting of its commercial model.

For European businesses, the promise is genuine choice. A manufacturer in Stuttgart could run workloads on Azure in Germany, failover to OVH in France, train its models on Scaleway, and keep data sovereignty intact—all without penalty or prohibitive cost. That vision, long described as multicloud nirvana, might finally come within reach.

Looking Ahead: The Real Test Is in the Implementation

As with any regulation, the ultimate impact will depend on enforcement. The DMA’s principles are strong, but turning broad mandates like “interoperability” into concrete technical standards is a monumental task. Cloud services are not stand-alone apps; they are deeply interdependent, globally distributed, and evolve weekly. The Commission will need to work closely with standards bodies like IETF and ISO, and likely create a specialized advisory group of engineers, not just lawyers.

There is also the risk of unintended consequences. Overly rigid interoperability requirements could ossify cloud architectures, preventing providers from differentiating through proprietary innovations that genuinely benefit users. And if the rules only apply to AWS and Azure but not to Google Cloud (which might currently fall below the thresholds), the playing field could tilt in unpredictable ways.

Yet for now, Europe is sending an unambiguous message: the cloud is not a free-for-all. The era of unregulated cloud dominance is ending.

The gatekeeper designation, if finalized, will force a reckoning—not just for Amazon and Microsoft, but for every enterprise that builds on their platforms. How they adapt, and whether the new rules foster genuine competition or merely add compliance burdens, will shape the digital economy for decades to come.