In two reports released on July 29, 2026, Civil Society think tank CUTS International has urged the government to go slow on bringing cloud services under India’s proposed ex‑ante competition regime, warning that premature regulation via the Digital Competition Bill (DCB) could dampen the country’s digital economy, raise compliance costs and curb startup‑led innovation.
“Any final decision should be guided by a careful assessment of market structure, competition dynamics, and the potential impact on startups, MSMEs, and India’s digital economy as a whole, as well as insights from international development,” one of the reports suggests.
The reports namely Competition Concerns in Cloud Services Market and Application of Indian Competition Law and [Over]Regulating Cloud Services: A Case for Restraint, argue that most cloud‑related competition issues can already be tackled under the existing Competition Act, 2002, backed by targeted enforcement and technological solutions, rather than bringing in new obligations for “systemically significant” digital firms.
The DCB, drafted on the basis of the Committee on Digital Competition Law’s (CDCL) 2024 report, envisages an ex‑ante framework for “Systemically Significant Digital Enterprises” (SSDEs) providing specified core digital services, ranging from search and social networking to operating systems, browsers, online intermediation, advertising, and cloud services.
The Centre later withdrew the initial DCB draft and commissioned a market study to reassess SSDE thresholds, review the CDS list and evaluate the impact of ex‑ante rules on competition, innovation and smaller players, with cloud explicitly on the review agenda.
Rather than a new statute for cloud, the report suggests policymakers lean on the Competition Act’s existing provisions on anti‑competitive agreements (section 3) and abuse of dominance (section 4).
“With the establishment of a dedicated Digital Markets Division within the Competition Commission of India (CCI) and the introduction of new “Settlement and Commitment” mechanisms under the Competition (Amendment) Act, 2023, India’s ex-post enforcement framework is becoming increasingly well-equipped to address digital-market concerns in a timely and targeted manner,” the report said.
Under the new framework, enterprises accused of vertical restraints or abuse can propose remedial commitments or settlements on a time‑bound basis, with no appeal from the resulting orders.
The think tank also ties its stance to recent Supreme Court jurisprudence, particularly CCI v Schott Glass India, where the apex court emphasised that findings of abuse must be grounded in clear evidence of anti‑competitive effects and lack of objective justification, and warned against enforcement that penalises size or success per se.
What’s worrying stakeholders about ex‑ante rules
The report’s netnographic review of news articles, policy commentaries, legal analyses and industry blogs finds that around 60 percent of public commentary on including cloud in the DCB is negative, driven by fears of regulatory uncertainty, high compliance costs, arbitrary SSDE designation and potential chilling effects on startup‑led investment and innovation.
Around 30 percent of feedback is positive, backing stronger rules to curb self‑preferencing and enhance consumer trust and competitive fairness, while the remaining 10 percent takes a neutral, comparative view anchored in lessons from EU and UK digital‑competition frameworks.
“Premature regulatory intervention could have unintended consequences for innovation, investment and customer choice in India’s rapidly evolving cloud ecosystem,” one of the reports said.
The reports put out common competition concerns in the cloud services market including cloud credits and deep discounts, data‑egress fees, technical barriers and poor interoperability, software licensing restrictions, tying and bundling, self‑preferencing and data leveraging, while also mapping them to specific provisions under the Competition Act.
Price controls
While CUTS acknowledges widespread complaints about opaque and rising cloud bills, citing studies where over 80 percent of Indian businesses reported unexpected overruns after cloud migration, it strongly opposes direct price control as a regulatory fix.
Price caps in a capital‑intensive, fast‑moving sector like cloud would discourage investment, reduce cloud credits and discounts for startups, incentivise quality downgrades or rationing and impose heavy monitoring burdens on regulators trying to police dozens of pricing models across hundreds of services, the reports argue.
The report instead recommends better price transparency and comparable disclosures; promoting multi‑cloud strategies and open standards to reduce lock‑in; targeted support such as data vouchers for startups; and ex‑post scrutiny of exploitative or discriminatory pricing under the existing competition law.
“Transparency and multi‑cloud support are superior remedies,” one of the reports concluded.
How the world is handling cloud services
In the EU, the European Commission conducted a market investigation under the Digital Markets Act (DMA) and conveyed its preliminary view that Amazon and Microsoft should be designated as gatekeepers under the DMA for their cloud computing services, Amazon Web Services (AWS) and Microsoft Azure, finding that these services act as a key gateway between EU businesses and their customers even though they do not meet the DMA’s quantitative thresholds, and noting that both companies are already gatekeepers for other services, generate substantial cloud turnover, have operational capacity and investment levels far ahead of rivals, and enjoy large, entrenched user bases reinforced by lock‑in effects, high switching costs and extensive ecosystems.
In the UK, Ofcom’s work triggered a Competition and Markets Authority (CMA) cloud market investigation that surfaced concerns around data‑egress fees, interoperability and software licensing, and initially floated Strategic Market Status designations for AWS and Azure under the new Digital Markets, Competition and Consumers Act.
However, a March 2026 CMA Board decision stepped back from an SMS probe into cloud services and instead accepted voluntary commitments from AWS and Microsoft to waive egress fees for UK customers switching providers for at least 180 days, reduce multi‑cloud data transfer costs, launch new inter‑cloud interconnection products and upgrade multi‑cloud management tools, while authorising a separate SMS investigation into Microsoft’s business‑software ecosystem focused on licensing.
Japan’s Fair Trade Commission has meanwhile opened an investigation into whether Microsoft’s terms for running software like Windows Server and Microsoft 365 on rival clouds unlawfully restrict use or raise costs, inviting third‑party submissions on suspected anticompetitive licensing practices.
These developments suggest that regulators are particularly focused on licensing and interoperability at the software–cloud interface, while remaining cautious about blanket ex‑ante designations for cloud infrastructure itself. This pattern has been endorsed by the CUTS report.
Drawing on the UK experience, the reports recommend that the government and CCI “pro‑actively engage” with major cloud providers to encourage them to extend to India the voluntary commitments they have made to the UK CMA.
“This approach would build on existing commercial momentum to deliver immediate, low‑friction benefits to Indian enterprises without resorting to an ex‑ante framework or direct competition enforcement,” the report noted.
