A Preliminary Finding With an Unusual Legal Basis
On 25 June 2026, the European Commission told Amazon and Microsoft it had reached a preliminary position that their cloud businesses — Amazon Web Services and Microsoft Azure — should be designated as "gatekeepers" under the Digital Markets Act. The finding did not come from Brussels alone. It was produced by a joint investigation team with the Dutch competition authority, the ACM, which confirmed its supporting role the same day, noting that enforcement authority itself remains exclusively the Commission's.
What makes this designation notable isn't the target — AWS and Azure are, in the Commission's own words, "the largest and second largest cloud computing services in the EU" — it's the mechanism. Both companies fall short of the DMA's quantitative thresholds that normally trigger automatic designation. The Commission is instead relying on the law's discretionary market-investigation route, under which a service can be designated on qualitative grounds — entrenched position, gateway function, network effects — even without hitting the numerical bar. The Commission cited "lock-in effects and high switching costs," a "large ecosystem," and the fact that AI tooling "has become a decisive factor in cloud procurement" as the qualitative basis.
The Case for Scrutiny
The underlying concern is not manufactured. Cloud switching costs are real and well documented: proprietary APIs, data-egress fees, and integration lock-in have long made moving workloads between providers expensive, even before AI entered the picture. Now that generative AI services are typically sold bundled with the cloud infrastructure that trains and serves them, a customer choosing a foundation-model API is often simultaneously locking in years of compute spend. Executive Vice-President Henna Virkkunen framed the stakes plainly: "Cloud services have become a cornerstone of Europe's economy — and a prerequisite for AI." If AI infrastructure becomes the next chokepoint the way app stores and ad exchanges did, a regulator waiting for market-share thresholds to catch up before acting risks intervening only after the entrenchment is complete. That's a coherent case for using discretion the law provides.
Where the Discretion Cuts Too Wide
But the DMA's thresholds — €7.5 billion in EU turnover, 45 million monthly end users, 10,000 business users — were not an oversight the co-legislators forgot to enforce; they were the deal. The DMA was built to give large platforms ex ante legal certainty about scope, trading the flexible, harm-by-harm analysis of ordinary competition law for a bright line that's fast and predictable to apply. Reaching past that line for two companies that indisputably fall short of it — using a market-investigation clause meant for edge cases — reintroduces exactly the case-by-case discretion the thresholds existed to avoid. That unpredictability lands hardest on the two companies now getting priced into it, but the wider signal is what should worry policymakers: any large B2B infrastructure provider in the EU is now on notice that clearing the numerical bar is not a reliable shield against designation.
Amazon's response gestures at this directly, arguing the finding "disregards the breadth of cloud services available to European customers" — it points to more than 200 active cloud providers in the EU and to the Data Act's cloud-switching obligations, already in force since 2024, which target the same egress-fee and portability concerns the DMA finding cites. Microsoft, meanwhile, argues the designation is narrow in the wrong direction, warning that ignoring Google Cloud's fast-growing Gemini-linked share "will tilt the market in a harmful way." Both objections point to the same structural problem: layering a second, discretionary regulatory regime for switching costs on top of one that already exists (the Data Act) risks duplicate compliance burden without a matching increase in switching for customers, while selectively designating two of three hyperscalers on AI-bundling logic that applies just as easily to the third.
What Happens Next
Amazon and Microsoft now enter a formal representations period before any final decision; the Commission's own process points to a ruling before the end of 2026, with practical obligations — interoperability, egress-fee limits, a ban on AI self-preferencing — unlikely to bind before mid-2027. If designated, ACM's Netherlands press release confirms both companies would have six months from a final decision to come into compliance.
The fix isn't to abandon scrutiny of AI-era cloud lock-in — it's for the final decision to do the harder work the preliminary finding skipped: show concrete foreclosure evidence rather than a general narrative about AI bundling, and reconcile the DMA obligations with the Data Act's overlapping cloud-switching regime rather than stacking a second one on top. A designation that survives judicial review on evidence, not on the elasticity of a discretionary clause, is the one that actually protects European cloud customers instead of just adding compliance overhead to the two providers big enough to absorb it.