The European Commission delivered a seismic blow to the cloud computing industry on June 25, 2026, informing Amazon and Microsoft that it had preliminarily concluded their respective Amazon Web Services (AWS) and Microsoft Azure platforms should be designated as "gatekeepers" under the Digital Markets Act (DMA). The decision marks the first time cloud infrastructure services have fallen under the sweeping EU regulation, setting the stage for a forced dismantling of technical and commercial lock-in practices that critics have long accused the hyperscalers of using to stifle competition.

If the preliminary findings are confirmed after a final investigation, AWS and Azure will be required to comply with a stringent set of obligations within six months. Those include providing free and effective data portability, ensuring interoperability with third-party services, refraining from self-preferencing their own software on their clouds, and allowing business users to promote offers and conclude contracts with customers outside the platform. Non-compliance could result in fines of up to 10% of the company’s total worldwide annual turnover, and up to 20% for repeated infringements, a threat that for Amazon and Microsoft could run into tens of billions of euros.

The preliminary designation comes after a year-long market investigation that examined whether the two providers act as an unavoidable gateway between business users and end users in the European Economic Area. Both companies easily surpassed the DMA’s quantitative thresholds—annual EEA turnover of €7.5 billion or a market cap of €75 billion, plus 45 million monthly active end users and 10,000 yearly active business users—but the Commission also conducted a qualitative assessment of their market power and the degree of lock-in in the cloud infrastructure market.

How the DMA Targets Cloud Lock-In

The DMA, which came into full force in 2024, aims to make digital markets fairer and more contestable by imposing ex-ante rules on large platforms designated as gatekeepers. Cloud computing services were explicitly listed as a core platform service subject to regulation, alongside search engines, social networks, and operating systems. The Commission’s rationale for including them is that cloud infrastructure has become the foundational layer of the digital economy, with switching costs so prohibitively high that businesses often cannot practically move workloads between providers even when prices rise or service quality declines.

For AWS and Azure, the most impactful obligations will likely center on Articles 6 and 7 of the DMA. Article 6(9) requires gatekeepers to provide end users with effective portability of their data—not just the ability to download files, but to transfer them in a structured, commonly used, and machine-readable format continuously and in real time. That directly challenges the egress fees that cloud providers charge to move data out of their networks, fees that can reach $0.09 per GB for AWS and similar amounts for Azure. The Commission has already signaled that such fees constitute an unjustified barrier to switching and would need to be eliminated.

Another key provision, Article 6(7), mandates interoperability with third-party operating systems, hardware, and software. For cloud platforms, this could mean that AWS and Azure must allow competing services—such as Google Cloud or smaller European providers—to integrate seamlessly with their infrastructure, making it possible for companies to build multi-cloud architectures without being penalized by proprietary APIs or closed ecosystems. The Commission is also scrutinizing licensing practices that tie Microsoft’s enterprise software, like Windows Server and SQL Server, more tightly to Azure than to rival clouds. The so-called “Azure tax,” where running Microsoft software on AWS or Google Cloud incurs higher licensing costs, has been a particular flashpoint in the EU’s investigation.

A Long-Awaited Move Against Hyperscaler Dominance

The preliminary finding did not come as a surprise to industry watchers. European cloud providers and trade associations, including CISPE (Cloud Infrastructure Services Providers in Europe), have been lobbying the Commission for years to address what they describe as unfair practices by the hyperscalers. In 2024, Microsoft and CISPE reached a settlement that avoided a formal antitrust complaint, but the DMA investigation continued independently. The new designation bypasses the need to prove harm after the fact, imposing proactive rules that aim to reshape the market structure.

“Today’s announcement is a turning point for the European cloud market,” said an EU competition official close to the investigation, speaking on condition of anonymity. “For too long, businesses have been locked into proprietary ecosystems not because of superior technology, but because of restrictive practices that make leaving practically impossible. The DMA gives us the tools to break that cycle.”

Amazon and Microsoft have argued that the cloud market is highly competitive and that customers choose their platforms based on merit. In previous filings, both companies pointed to the rapid growth of alternative providers and the ease with which startups can spin up on any cloud. But the Commission’s investigation found that while the market appears dynamic at the entry level, once a large enterprise commits to a single cloud for its mission-critical workloads, the cost and complexity of migration become insurmountable. Data showed that over 70% of enterprises in the EU that spend more than €1 million annually on cloud remain with the same provider year after year, often because of technical dependencies on proprietary services like AWS Lambda or Azure Active Directory.

What the Designation Means for Microsoft and Amazon

For Microsoft, the gatekeeper label for Azure adds to its existing DMA obligations for Windows and LinkedIn. The company has already faced regulatory pressure to open up its Windows operating system and allow rival app stores. With Azure now under the spotlight, Microsoft may be forced to publish technical specifications for its APIs, provide free migration tools, and stop bundling its own productivity and security services in ways that disadvantage competitors. The company’s “Azure Hybrid Benefit,” which allows customers to use existing on-premises licenses on Azure at no extra cost, might need to be extended equally to other clouds if it is found to constitute a tying practice.

Amazon faces a similar reckoning. AWS, the market leader with roughly 40% of the EU cloud infrastructure market, has built its dominance on a vast portfolio of proprietary services—from its AI/ML platform SageMaker to its serverless computing engine Lambda. The DMA could compel AWS to offer interoperability APIs that let these services work with rival clouds or on-premises systems, eroding the competitive moat that has made AWS the default choice for so many enterprises. Furthermore, AWS’s Marketplace, where third-party software is sold, may need to allow competitors to promote offers directly to AWS customers without restriction.

Both companies now have the opportunity to rebut the preliminary findings and present arguments during a formal hearing. The Commission’s final decision is expected within 12 months. In the meantime, the market is already reacting. Shares of European cloud providers such as OVHcloud and Deutsche Telekom’s T-Systems rose on the news, while AWS and Azure customers began reevaluating their long-term cloud strategies.

Ripple Effects Across the Windows Ecosystem

The designation carries particular weight for the Windows community. Microsoft’s deep integration of Azure with Windows Server, Active Directory, and the entire Microsoft 365 suite has created a sticky ecosystem that makes it challenging for IT administrators to consider moving to another cloud. Many Windows-based organizations have effectively been funneled into Azure as a natural extension of their on-premises environments.

Under the DMA, Microsoft might be forced to ensure that administrative tools like Microsoft Endpoint Manager or Azure Arc can manage resources on non-Azure clouds with the same fidelity. Additionally, the requirement for data portability could mean that customers using Azure Active Directory (now Microsoft Entra ID) could seamlessly export their user identities and policies to another identity provider without manual reconfiguration. That would be a significant shift for enterprises that have standardized on Microsoft’s identity stack and view migration as a multiyear project fraught with risk.

Developers building on the Windows platform will also watch closely. If Azure’s proprietary APIs must be opened or standardized, it could spur a new wave of multi-cloud tooling and give organizations more confidence to adopt a “cloud-agnostic” posture. For small and medium-sized businesses, the elimination of egress fees alone could save thousands of euros per year and make it feasible to back up data to a secondary cloud or switch providers during price negotiations.

Amazon and Microsoft are expected to mount vigorous defenses. Both have deep legal benches and have already signaled they may challenge the DMA’s cloud provisions in court, arguing that the regulation oversteps the EU’s authority and imposes disproportionate burdens. The outcome of similar appeals in other industries—such as those by Apple and Meta—has been mixed, but the European Court of Justice has generally upheld the DMA’s legal basis.

One area of legal wrangling will be the definition of “core platform service” for cloud computing. The companies may argue that cloud infrastructure is not a single service but a bundle of distinct products, some of which are not captured by the DMA. The Commission, however, has consistently taken a broad view, defining the cloud as an integrated stack that includes compute, storage, networking, and platform services. The final designation will likely cover AWS and Azure in their entirety, leaving little room for carve-outs.

If the gatekeeper status is confirmed, the real work begins: defining exactly what compliance looks like in practice. The DMA’s text provides general principles, but the specifics of interoperability standards, APIs, and data formats will be hammered out in dialogue with the companies and technical experts. That process could extend well into 2027, with the threat of further fines if the Commission deems the proposed solutions inadequate.

The Broader Global Implications

The EU’s move is being watched closely by regulators in other jurisdictions. The UK’s Competition and Markets Authority has been conducting its own cloud market investigation and is expected to issue remedies in 2027. In the United States, antitrust sentiment has cooled somewhat under the current administration, but several state attorneys general have expressed interest in pursuing cloud market cases. What happens in Brussels often sets a template that echoes worldwide, not least because cloud providers would rather adopt a single set of technical changes globally than maintain multiple regional implementations.

For customers, the DMA designation promises a future where the cloud more closely resembles the open internet: services built on common standards, with data flowing freely between providers and no single company able to hold data hostage. Whether that vision materializes depends on the Commission’s firmness in enforcement and the industry’s willingness to embrace a new era of openness.

As one IT director at a Frankfurt-based automotive supplier put it: “We’ve been wanting to diversify our cloud spend for years, but the switching costs always killed the business case. If Brussels can force the big clouds to play fair, we’ll finally have a real choice. And that can only be good for innovation.”