The European Commission has taken an early view that Amazon Web Services (AWS) and Microsoft Azure should be designated as "gatekeepers" under the Digital Markets Act (DMA), even though neither platform meets the law's usual user-count thresholds. The preliminary finding, reported by multiple outlets, gives the two cloud giants six months to comply with a set of conduct rules if the decision is confirmed after a formal review.
The DMA is a landmark European regulation designed to curb the power of the largest digital platforms. Typically, a company qualifies as a gatekeeper if it has at least 45 million monthly active users in the EU and a market capitalisation above €75 billion. AWS and Azure fall short on the user-count metric, but the Commission argues that their role in enterprise cloud computing makes them equally hard to escape.
Why cloud lock-in matters
The core issue is switching costs. Moving applications, data, and entire IT workloads from one cloud provider to another is expensive, time-consuming, and technically complex. Many businesses have built their operations around AWS or Azure services, making it impractical to switch even if they wanted to. The Commission sees this as a classic barrier to competition, one that the DMA is meant to address.
That concern is amplified by the rapid growth of artificial intelligence. Both Amazon and Microsoft are aggressively bundling cloud services with AI tools, such as Amazon's Bedrock and Microsoft's Azure OpenAI Service. These integrated stacks can deepen customer reliance on a single vendor, making it even harder to mix and match providers. Regulators worry that this could stifle innovation and keep prices higher than they would be in a more competitive market.
If the gatekeeper label is confirmed, AWS and Azure would have to comply with DMA rules that ban certain anti-competitive practices. These include restrictions on tying products together, limiting data portability, and using unfair contract terms. The companies would also face obligations to make their platforms more interoperable with rivals, potentially lowering the barriers that currently lock customers in.
What happens next
The Commission's early view is not a final decision. Both Amazon and Microsoft have the opportunity to respond before the EU makes a formal ruling. Amazon told MT Newswires that overlapping regulatory requirements could hurt European competitiveness, while Microsoft said it is engaging with the Commission and argued that excluding Alphabet's Google Cloud from the same designation could distort competition.
If the designation goes ahead, the six-month compliance clock would start ticking. During that period, the companies would need to adjust their business practices to meet DMA standards, on top of other EU cloud rules such as the Data Act. That could mean renegotiating contracts, changing pricing structures, and opening up technical interfaces to third parties.
What it means for investors
For investors, the gatekeeper label is more than a regulatory headache. It has the potential to reshape how cloud contracts are negotiated in Europe, one of the world's largest cloud markets. The DMA is designed to reduce the tricks that make switching painful, such as restrictive contract terms, technical friction, and tight product tie-ins. If regulators force more portability and fairer access to key features, big European customers may gain leverage at renewal time, making price hikes and high-margin add-ons harder to defend even as computing demand keeps rising.
Over time, that could accelerate "multi-cloud" adoption, where businesses use more than one provider for different workloads. Smaller cloud and software rivals, such as Google Cloud, IBM Cloud, and European players like OVHcloud, could gain a better shot at winning specific workloads, especially in AI-heavy projects where vendors are trying to lock customers into end-to-end platforms. For Amazon and Microsoft, the financial impact would depend on how much of their European revenue is affected and how quickly they adapt.
The broader regulatory backdrop is also worth watching. The EU has been tightening its grip on big tech, with the DMA and Digital Services Act already imposing new rules on platforms like Google Search, Apple's App Store, and Meta's Facebook. The extension of gatekeeper rules to cloud services signals that regulators are looking beyond consumer-facing platforms to enterprise infrastructure. That could have implications for other cloud providers, including Google Cloud, which Microsoft has already pointed out is not included in the current probe.
For everyday investors, the key takeaway is that regulatory risk in cloud computing is rising. While AWS and Azure remain dominant, the DMA could gradually erode their pricing power and customer lock-in advantages in Europe. That doesn't mean the stocks are doomed, but it does add a layer of uncertainty that investors should factor into their long-term outlook for the sector.
