Competition Commission to tackle data centre operators in South Africa

The Department of Communications and Digital Technologies (DCDT) wants the Competition Commission to investigate South Africa’s data centre and cloud services markets to identify anti-competitive behaviour.

In its 2024 National Policy on Data and Cloud, published on 31 May, it also proposed that the commission consider reviewing and adapting the Competition Act concerning the cloud and data market.

It says there is no need for a digital regulator focused solely on competition issues in the digital space.

“The Competition Commission shall conduct studies in the data centre and cloud services markets to identify potential anti-competitive trends and behaviour, and where applicable, identify proactive preventative measures to ensure a fair and competitive market,” it says.

“The Competition Commission shall consider reviewing and potentially augmenting the Competition Act in relation to the data and cloud market, where empirical evidence indicates that the current law is inadequate to address competition issues in these markets.”

The DCDT noted that the commission has already undertaken merger and acquisition activity in the data centre market.

Furthermore, it has initiated market inquiries to investigate competition issues in digital markets.

“They have also implemented censures where anti-competitive behaviour by e-commerce and digital platforms was found to transgress competition rules,” the policy says.

“Thus, there is no empirical evidence necessitating a digital regulator focused solely on competition issues in the digital space.”

The DCDT noted that competition issues in the digital space can be complex and that problems arise when the market is structured to purposefully block new entrants.

The complexity results from companies often having a footprint in multiple jurisdictions without a physical presence.

“Therefore, further research is necessary to understand potential anti-competitive practices in the data and cloud market,” the policy says.

“Adequate capacity must be created to investigate these practices and implement appropriate measures to combat anti-competitive behaviour.”

The DCDT outlined further policy interventions concerning competition in the cloud and data space. It proposes that:

  • Cloud service providers shall ensure transparency regarding data portability, interoperability costs, and technical implications at the point of contracting, to help customers to make informed decisions and promote fair competition;
  • Competition among data and cloud service providers shall be encouraged to foster competitive and innovative offerings, as well as to potentially reduce costs for consumers; and,
  • Different architectures and operating systems shall be supported to provide a variety of options for the public, ensuring that consumers have access to diverse and suitable technological solutions.

The Competition Commission slapped Microsoft Azure with a formal complaint in April 2024 over concerns that it was abusing its market power to squeeze out rivals in the space.

Microsoft is allegedly overcharging businesses to switch their cloud licences to other vendors.

If found guilty, the US tech giant could be fined up to 10% of its South African revenue.

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Competition Commission to tackle data centre operators in South Africa