European Union antitrust regulators declared on June 25, 2026, that Amazon Web Services and Microsoft Azure should be labeled gatekeepers under the Digital Markets Act, marking the first time the bloc has directly targeted the foundational infrastructure of the internet. The announcement follows a seven-month investigation into the cloud computing market and threatens to reshape how the world’s most dominant hyperscalers compete. If adopted, the designations would force both companies to open their ecosystems, share customer data portability, and refrain from bundling services in ways that shut out smaller rivals.

The preliminary finding, issued by the European Commission’s Directorate-General for Competition, concludes that AWS and Azure each hold an entrenched and durable position in the European cloud market. Regulators are now seeking feedback from the companies and third parties before making a final decision within six months. A gatekeeper label under the DMA compels platforms to comply with a sweeping set of obligations or face fines of up to 10 percent of global annual turnover, with repeat offenders risking even stiffer penalties.

The Digital Markets Act’s Expanding Reach

The DMA, which took full effect in 2023, was designed to curb the power of large online platforms that act as gateways between businesses and consumers. It defines gatekeepers as companies that have significant impact on the EU internal market, operate a core platform service that serves as an important gateway for business users to reach end users, and enjoy an entrenched position. Previous designations have included Alphabet, Meta, Apple, ByteDance, and Booking.com, primarily for search engines, social networks, and operating systems. Cloud computing was always a service category listed in the regulation, but until now no cloud provider had faced a formal gatekeeper investigation.

The current probe, codenamed DMA.100122, reviewed the entire cloud infrastructure-as-a-service and platform-as-a-service landscape. Investigators focused on market concentration, switching barriers, proprietary technologies, and licensing practices. According to the Commission, AWS commands over 31 percent of the European cloud market and Azure holds roughly 24 percent, together controlling more than half of all spending. The next largest competitor, Google Cloud, trails at about 11 percent, making it difficult for new entrants to challenge the dual dominance.

“Cloud services are the digital backbone of the European economy, and we must ensure that the gateways to that backbone are not controlled by a handful of companies that can dictate terms unilaterally,” EU competition chief Teresa Ribera said in a statement. “Today’s preliminary findings are a critical step toward a fairer, more contestable cloud market.”

Inside the Seven-Month Investigation

Launched in November 2025, the investigation gathered input from over 80 cloud customers, independent software vendors, and competing infrastructure providers. The Commission examined pricing models, data egress fees, technical lock-in mechanisms, and licensing restrictions. The probe was triggered by complaints from smaller European cloud providers, including OVHcloud, Deutsche Telekom’s T-Systems, and a coalition of open-source enterprises, who argued that AWS and Azure use their vast resources to foreclose competition.

A central issue was data transfer costs. Critics charged that AWS and Azure set artificially high egress fees, making it prohibitively expensive for customers to move data out of their platforms or adopt multi-cloud strategies. The Commission found that these fees could constitute unfair trading conditions under the DMA. Another flashpoint involved licensing; Microsoft’s decade-old practice of offering cheaper Windows Server and SQL Server licenses exclusively on Azure drew particular scrutiny, as did Amazon’s bundling of AWS-native services that lock customers into its proprietary ecosystem.

The seven-month timeframe underscores the urgency regulators feel. Under DMA rules, the Commission has 14 months to complete market investigations and adopt final decisions, but top officials accelerated this case, calling the cloud market “a foundational enabler of digital sovereignty” in post-Brexit Europe.

What Gatekeeper Status Would Mean for AWS and Azure

Designation as a gatekeeper would trigger a cascade of interoperability, data portability, and anti-circumvention obligations. Cloud providers would be required to:

  • Allow business users to access their data stored on the platform free of charge and enable seamless transfer to rival services. This would effectively ban data egress fees above the cost of network transfer.
  • Provide interoperable interfaces and decouple core services to allow third-party tools to plug in on equal terms. That could force AWS and Azure to open up management APIs and monitoring systems that currently lock customers into their consoles.
  • Refrain from self-preferencing their own services over those of competitors. For instance, Microsoft could no longer advertise Azure’s native AI and database offerings preferentially in the Azure portal.
  • Cease combining end-user data from their cloud platforms with data from other core platform services, unless the end user consents. This would bar Amazon from linking AWS customer behavior with Amazon Marketplace or Prime Video analytics.
  • Allow business users to promote offers and conclude contracts with end users outside the gatekeeper’s platform, without penalties.

Perhaps most worrying to the hyperscalers is the interoperability mandate, which could dismantle the deep integration between cloud infrastructure and higher-margin platform services. Analysts say it could force AWS to smooth the path for Kubernetes alternatives that bypass its proprietary orchestration, or compel Microsoft to release Azure Arc management capabilities in a fully vendor-neutral fashion.

Financial and Operational Fallout

The financial stakes are immense. AWS generated over $95 billion in revenue in 2025, with European sales estimated at $27 billion. Azure’s European revenue topped $34 billion last fiscal year. Even a modest erosion of lock-in could shift billions of dollars to smaller providers. Industry analysts at Gartner predict that a DMA-driven rebalancing could double the market share of European cloud providers, currently hovering around 15 percent, within three years.

“This is not just about fines; the structural remedies could fundamentally alter the unit economics of the cloud business,” said Jan von Meier, a Brussels-based antitrust partner at a global law firm. “If customers can easily move workloads and data without penalty, hyperscaler margins will compress, and the industry will look more like a commodity utility than a walled garden.”

Both companies have reportedly started lobbying through transatlantic industry groups. Microsoft has publicly argued that cloud market is already competitive, pointing to the rise of AI services that are often consumed across multiple clouds. Amazon has insisted that customers stay on AWS because of superior reliability and innovation, not lock-in. But behind closed doors, the firms have floated a compromise package that includes a standardized data portability framework and a voluntary cap on egress fees—tactics reminiscent of Google’s earlier attempts to preempt DMA obligations.

Microsoft’s Tangled Web of Licensing

A unique dimension of the probe involves Microsoft’s software licensing. For years, Microsoft has been accused of applying restrictive terms that make it more expensive to run its productivity and server software on cloud platforms other than Azure. The investigation reportedly found evidence that these practices violate the DMA’s ban on leveraging a gatekeeper position to favor own services. If enforced, Microsoft would need to offer fully equivalent licensing terms irrespective of where software runs—whether on AWS, Google Cloud, or a local data center.

The remedy could extend beyond cloud to hybrid environments. Businesses that invested heavily in on-premises Data Centers would gain new leverage, able to shift licenses between their own servers and any public cloud without penalty. This could upend Microsoft’s “Azure Hybrid Benefit,” which currently offers discounts only when moving licenses to Azure.

Reaction from Competitors and Customers

European cloud providers celebrated the preliminary finding as a watershed moment. “This is the first real chance in a decade to break the hyperscaler stranglehold,” said Michel Paulin, CEO of OVHcloud. “Meaningful interoperability will allow European companies to compete on service and innovation, not just on the size of their advertising budgets.”

Business customers offered mixed reactions. Some IT leaders fear that the compliance burden could distract AWS and Azure from improving reliability and security. Others welcome the prospect of easier multi-cloud deployments. “We’ve wanted to run a true multi-cloud architecture for years, but the data egress fees and API lock-in made it financially irrational,” said Clara Heinemann, CTO of a Berlin-based fintech. “If the DMA makes that painless, we’ll finally be able to optimize costs and avoid vendor dependency.”

However, some experts caution that the DMA’s requirements might lead to a less secure cloud ecosystem. Opening up core management APIs to third parties could expand the attack surface, and forcing decoupling of integrated security services might create compliance headaches for regulated industries.

The Broader Antitrust Climate

The cloud probe comes amid an intensifying global crackdown on Big Tech’s market power. In the United States, the Department of Justice is simultaneously pursuing an antitrust action against Microsoft over bundling practices in government cloud contracts. China’s market regulator has fined Alibaba Cloud for abuse of dominance. And the UK’s Competition and Markets Authority completed a cloud market study in 2025 that recommended similar interoperability measures, though so far without the force of law.

European regulators view the DMA as a flexible tool that can adapt to digital markets more nimbly than traditional competition law. The cloud designation, if finalized, would be the first test of the DMA’s ability to tackle infrastructure providers, not just consumer-facing platforms. Legal observers expect the companies to mount vigorous challenges in the European Court of Justice, arguing that cloud services do not function as a gateway in the same sense as app stores or search engines.

Next Steps and Potential Timeline

The Commission’s preliminary findings open a 45-day public consultation period during which Amazon, Microsoft, and any interested third party can submit arguments and data. Both companies will likely argue that the market is dynamic and that AI-driven workload portability already reduces lock-in. The Commission must then issue a final decision by December 2026. Once designated, gatekeepers have six months to demonstrate compliance with the full list of obligations.

Failure to comply could prove costly. Beyond fines, the DMA gives the Commission authority to impose structural remedies such as divestiture of business units—though such measures are considered a last resort. In practice, regulators would likely pursue behavioral remedies first, annual compliance reports, and continuous market monitoring.

The designation could also have a domino effect. EU officials have signaled that Google Cloud, while smaller, may face its own investigation if the Commission determines that it, too, operates a significant gateway service in adjacent cloud markets such as data analytics or AI model hosting.

A Pivotal Moment for the Cloud Industry

Whatever the final outcome, the DMA probe has already altered the strategic calculus of every major cloud provider. AWS and Azure are accelerating deployments of open-source tooling and publishing previously confidential API documentation. Microsoft in early 2026 unilaterally slashed data egress fees for Azure by 70 percent in a move widely seen as an effort to defuse regulatory pressure. Amazon followed with a similar reduction, though critics note that both still charge more than smaller providers.

These moves suggest that, even before a final designation, the DMA is reshaping cloud pricing and partnership models. European businesses, long frustrated by opaque contracts and unexpected costs, are already benefiting from a more transparent market.

The coming months will be a defining period for digital competition policy. If the EU succeeds in designating cloud providers as gatekeepers, the model could be exported to other jurisdictions, establishing a global standard for platform regulation that extends far beyond social media and search. For Microsoft and Amazon, the fight to avoid the label is not just about avoiding fines; it is about preserving the integrated, high-margin architectures that have made cloud computing the most lucrative enterprise technology business in history.