Purpose of the consultation

The Spanish antitrust agency CNMC has published a public consultation to analyse competition in cloud services. These services are fundamental for companies to carry out their business activities and more than 30% of companies in Spain rely on them. These services are, as indicated by the CNMC, a basic pillar of the digital transformation process and of business competitiveness, as they allow for data to be processed, stored and managed remotely.

Due to its importance, cloud services are subject to several laws and regulations, such as competition laws, the Data Act, the Digital Services Act… Cloud services are at the intersection of application of different legal frameworks and this is a great opportunity for cloud services to engage with a relevant regulator and provide their views.

In particular, several of the questions in this public consultation have a direct connection with the Data Act and the obligation of “easy switching between data processing services” (see our post about it here) and also have impact on competition laws.

Deadline

To participate in the public consultation responses must be filed before 21 June 2024.

Questions

Questions are divided into 5 sections (full list here) and include the following main questions:

1. Assessment of the market’s functioning:

1. In your opinion, what will be the main factors that will drive the growth of the sector in the coming years?

2. How would you classify the different types of agents/operators involved in the cloud market value chain?

3. Would you highlight any particular feature of the cloud market in Spain as compared to other European countries? How do you assess the overall competitive situation of the cloud market in Spain? Are there any particularly significant trends?

4. In your opinion, what are the main elements that determine the dynamics of competition among cloud service providers? In your opinion, which other markets can affect the competitive dynamics in the provision of cloud services?

5. In your opinion, when contracting cloud services from an operator, how do the main providers' offers differ from each other?

6. When contracting cloud services from an operator, describe in order of importance the factors that, in your opinion, are the main determinants of the contracting decision, such as, among others, price, technical quality of the service, the provider's portfolio of services, security, transparency of the contract, nationality of the provider, previous relationship with the same provider, previous knowledge by the staff, etc.

7. When contracting cloud services from an operator, assess the extent to which contract terms and conditions are negotiable.

8. Indicate what difficulties may arise, at the time of contracting a provider’s cloud services, to anticipate the final cost of use of the contracted service.

9. Assess the transparency of contract terms and conditions and indicate whether changes in contract terms and conditions are common.

10. In migrating to the cloud, explain the role of the integrator or intermediary, and its relevance to the competitive dynamics of the market.

11. For software development companies offering independent cloud-based software applications, consider which are the main channels to reach the end customer and the factors on which the choice of the chosen channel(s) depends. When offering independent cloud-based software applications, consider whether it is possible to do so in more than one marketplace from a vertically integrated provider.

12. Assess the conditions required to intermediaries to be able to sell the products of one or more cloud service providers, and whether in your opinion they affect the competitiveness of the final solution offered by the intermediary in relation to other sales channels.

2. Barriers to competition in the cloud sector

13. Assess whether there are significant barriers to entry into the cloud services or cloud infrastructure market. If so, indicate and describe what type of barriers (e.g., regulatory, investment size, availability of qualified staff, other) and indicate which services or cloud layer (IaaS, PaaS, SaaS) are affected by each barrier.

14. In your opinion, assess which cloud layers (IaaS, PaaS, SaaS) present the greatest competitive challenges and explain why.

15. For companies already present in the cloud market, what are the main obstacles to their activity and to competition in the sector?

3. Cloud migration and change of provider

16. Assess what technical or economic difficulties exist for migrating to the cloud. Indicate, in your opinion, which solutions could be implemented to mitigate them.

17. In your opinion, once the services of one cloud provider have been contracted, what technical, economic or other factors might make it difficult to change provider? In your opinion, which solutions might be implemented to mitigate these difficulties?

4. Interoperability of cloud services

18. In your opinion, what are the difficulties in contracting the services of more than one cloud provider? In your answer, please assess aspects of vertical interoperability (between services located in different cloud layers), horizontal interoperability (between services located in the same cloud layer) and interoperability of the data produced when using different cloud services. In your opinion, what solutions could be implemented?

19. Assess the advantages and disadvantages of adopting interoperability standards or protocols, including their impact on competition and/or innovation.

5. Commercial terms

20. When contracting services from the same cloud provider, and from the point of view of its commercial offer, assess what obstacles exist to contracting each service separately.

21. When contracting additional services from a cloud provider, assess the relationship between contracting these services and the discounts for the use of additional services.

6. Public procurement of cloud services

22. Assess the existing obstacles to competition in the public procurement of cloud services, and indicate the solutions that could be implemented in your opinion.

7. Additional comments

23. Provide additional comments on other barriers, distorting factors or issues that you consider relevant to the functioning of this sector.

Next steps

If you require further information or guidance on the impact of this consultation, please get in touch with the contacts listed in this publication.

Authored by Casto González-Páramo, Santiago de Ampuero , Juan Ramón Robles, and Raquel Fernández