Cloud services are IT services that are offered over the Internet. Users do not purchase any physical hardware and software; instead, they pay for the actual use of one or more services that run on the infrastructure of a cloud provider. Cloud services are often categorized into three categories (also known as “layers”): Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).

The ACM found that it is difficult for users of cloud services to switch providers due to technical, organizational (data cannot always be transferred easily from one operator to the other) or financial (i.e., cloud providers charge high fees for data transfers) barriers. The report found that these barriers increase market consolidation, meaning that users are locked into the chosen cloud provider for a long time. In a market that has become increasingly saturated, this leads to risks of lower levels of innovation, lower quality and higher prices. The evolution of the market for cloud services also has an impact on the competitive dynamics of the entire Internet ecosystem in which the cloud is set to play an increasingly important role.