AWS' dominance in the cloud market appears to be declining, as new data shows a decrease in their IaaS market share, while Microsoft and Google both report growth.

AWS' dominance in the cloud market appears to be declining, as new data shows a decrease in their IaaS market share, while Microsoft and Google both report growth.

The cloud market is witnessing a surge in growth, driven by the increasing demand for flexibility in data residency and sovereignty, as enterprises prioritise modernization by migrating existing workloads to the cloud and deploying cloud-native applications across diverse environments. The global IaaS market grew by 22.5% in 2024, reaching a staggering $171.8 billion, with analysts predicting a 25% year-over-year growth in 2025, taking the market to over $210 billion.

In this dynamic landscape, the top three players – Amazon Web Services (AWS), Microsoft Azure, and Google Cloud – are vying for dominance.

Amazon Web Services (AWS) remains the market leader, holding approximately 30-31% market share, although its dominance is being challenged by rapid growth from its competitors. AWS generated approximately $28.8 billion in revenue in Q4 2024, representing a 19% year-over-year growth. However, the company faces pressure from Microsoft and Google in AI-driven innovation and ecosystem integration, with somewhat fragmented GenAI initiatives compared to its rivals.

Microsoft Azure follows closely with a market share of around 21-25%. The company has steadily gained market share since 2018, reaching about 25% in recent times. Its Intelligent Cloud segment generated $25.5 billion in Q4 2024 revenue, boosted by aggressive AI investments, including a $13 billion AI business running at a 175% year-over-year increase. Microsoft's strong AI partnership with OpenAI is pivotal in its market gains.

Google Cloud holds about 11-12% market share, growing the fastest among the three with the highest AI customer conversion rate (36%). Google Cloud's strong focus on AI innovation is evident in its products like Bard and Gemini tools, which contributed to a 142% surge in operating income to $2.1 billion in Q4 2024.

The UK's Competition and Markets Authority (CMA) reported that both AWS and Microsoft have "significant unilateral market power" in the UK's cloud infrastructure services market, with the two giants commanding a combined 70% market share. The CMA recommended that both companies be assessed for Strategic Market Status (SMS), which could lead to targeted interventions to encourage greater competition.

As the market grows, the leaders face challenges such as pricing pressure, regional preferences, and intensified competition. All providers must keep up massive capital expenditures for cloud infrastructure expansion due to AI’s demand for high-capacity compute and data center buildouts, which significantly raise costs. The market growth, although strong, has moderated somewhat compared to the pandemic peak, requiring constant innovation and multi-cloud strategies.

Emerging trends in IaaS in 2025 highlight AI and ML integration, data security, multi-cloud and hybrid deployments, edge computing, and serverless architectures as essential areas of focus. Partnerships with AI startups and investment in AI-powered services are central to cloud providers’ strategies.

Google is focusing on cloud sovereignty, with plans to offer its European Sovereign Cloud service exclusively to Europeans. AWS has also announced its commitment to data sovereignty, with its European Sovereign Cloud service set to be run by Europeans.

In summary, AWS leads in market size but sees slowing growth and competitive pressure, Microsoft gains share rapidly via strong AI integration and enterprise adoption, and Google Cloud grows fastest in AI innovation and customer conversion, all amidst a dynamic market driven by AI, modernization needs, and massive infrastructure investments.

1. The surge in cloud market growth is attributed to the demand for flexibility in data residency and sovereignty, as enterprises prioritize modernization through cloud migration and cloud-native application deployment.
2. In the global IaaS market, which grew by 22.5% in 2024 to reach $171.8 billion, analysts predict a 25% year-over-year growth in 2025, taking the market to over $210 billion.
3. Amazon Web Services (AWS) remains the market leader, holding approximately 30-31% market share, but faces pressure from Microsoft and Google in AI-driven innovation and ecosystem integration.
4. Microsoft Azure follows closely with a market share of around 21-25%, boosted by aggressive AI investments and a strong AI partnership with OpenAI.
5. Google Cloud holds about 11-12% market share, growing the fastest among the three with the highest AI customer conversion rate, and focusing on cloud sovereignty with plans for an exclusive European Sovereign Cloud service.
6. The UK's Competition and Markets Authority (CMA) reported that AWS and Microsoft have "significant unilateral market power" in the UK's cloud infrastructure services market, with intensified competition and pricing pressure expected.
7. In the emerging landscape of IaaS in 2025, cloud providers are focusing on AI and ML integration, data security, multi-cloud and hybrid deployments, edge computing, andserverless architectures, with partnerships with AI startups and investments in AI-powered services central to their strategies.

Read also: