Introduction
On 17 August 2026, the Federal Government of Nigeria announced the issuance of the National Digital Cloud Policy (the “Policy”) as a comprehensive strategic framework for accelerating the development, governance and internationalisation of Nigeria’s cloud computing and digital infrastructure ecosystem. The Policy supersedes the 2019 Nigeria Cloud Computing Policy and seeks to address longstanding structural constraints, including fragmented public procurement, infrastructure deficits, high operational costs and limited access to reliable energy. One of the Policy’s objectives is to build a competitive, multi-provider market. In this regard, the Policy seeks to ensure the maintenance of an open and contestable market in which domestic and international cloud providers compete on transparent terms, and in which customers, including government, retain genuine choice, data portability and the practical ability to switch providers without prohibitive cost.
From a competition policy perspective, contestability is concerned not merely with the ease with which firms can enter and operate in a market, but, more fundamentally, with the extent to which actual and potential competition can credibly constrain the conduct and market power of incumbent firms. Low barriers to entry and expansion can impose an important competitive constraint on incumbents, while barriers that make entry, expansion or switching difficult can enable existing market positions to become entrenched. This distinction is particularly important in cloud markets, where the existence of multiple providers and the formal ability of customers to choose between them may not, in practice, translate into effective competition.
The Policy therefore establishes an ambitious framework for developing an open, competitive and multi-provider cloud market. It seeks to attract investment, expand domestic digital infrastructure, support indigenous capability, modernise government service delivery and position Nigeria as a regional cloud hosting hub. Importantly, the Policy does not pursue digital sovereignty through broad data localisation. Instead, it adopts a differentiated and proportionate approach under which enhanced sovereignty requirements apply principally to specified categories of government and regulated data, while commercial activity remains substantially open to cross border data flows. This is an appropriate starting point for a developing market.
The Policy’s commitment to openness and competition, however, should not be treated as sufficient in itself to guarantee a contestable market. Competition in cloud infrastructure can deteriorate even where markets are formally open and customers are free to choose between providers. The experience of the United Kingdom (UK) is instructive in this regard. Ofcom’s 2023 Cloud Services Market Study and the Competition and Markets Authority’s (CMA’s) subsequent market investigation into cloud infrastructure services examined a range of competition concerns, including market concentration, barriers to switching and multi-cloud adoption, egress fees (fees imposed by cloud providers for transferring data out of their cloud environment), technical and commercial lock in, and certain software licensing practices. Ofcom’s referral of the UK public cloud infrastructure services market to the CMA itself reflected concerns that competition might not be working effectively.
The UK experience demonstrates that competition concerns in cloud markets may arise not merely from concentration in the abstract, but from particular contractual, technical and commercial practices that increase switching costs, weaken customer mobility and reinforce existing market positions. The CMA’s subsequent findings therefore provide a particularly useful reference point for considering how Nigeria can preserve contestability while its own cloud market is still developing.
Nigeria has an important advantage. Its cloud market is still developing, and its market structure, procurement arrangements and technical standards can still be shaped before potentially significant barriers to entry, expansion and switching become entrenched. Competition policy should therefore operate not merely as an enforcement mechanism after market power has become established, but as an ex ante complementary policy instrument that helps preserve contestability as the market develops. The objective should not be to prevent successful providers from acquiring scale or to impose artificial limits on investment. Rather, it should be to ensure that scale is achieved through competition on the merits and does not become self-reinforcing through exclusionary arrangements, artificial switching barriers or anticompetitive consolidation.
It is against this background that this article considers the competition dimensions of the Policy, drawing particularly on the experience and findings of Ofcom and the CMA to examine how competition policy can help translate the Policy’s commitment to an open market into a genuinely competitive and contestable one.
Cloud Computing and Different Cloud Business Models
Cloud computing refers broadly to the provision of computing resources and services on demand over the internet, allowing customers to access computing capacity, applications, storage and other digital resources according to their requirements.1 For the purposes of this article, a cloud customer (or customer) is a person or organisation that has entered into an arrangement with a cloud provider to obtain and use cloud services, while a cloud provider (or provider) is a person or organisation that provides those services under a contractual arrangement with the customer.2
Cloud services are commonly distinguished according to three principal service models: Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Software as a Service (SaaS).3
- Infrastructure as a Service (IaaS): Under IaaS, the provider makes computing infrastructure available to the customer on demand, including virtualised computing resources, storage and networking capabilities.4 The customer generally retains responsibility for managing the operating system, applications and other software deployed on the infrastructure, while the provider remains responsible for the underlying physical infrastructure and the associated virtualisation environment.5
- Platform as a Service (PaaS): Under PaaS, the provider supplies a managed computing platform that enables customers to develop, deploy and operate applications without having to manage the underlying physical infrastructure or, generally, the operating system.6 The provider assumes responsibility for the infrastructure and platform environment, while the customer principally manages the applications and associated data deployed on the platform.7
- Software as a Service (SaaS): Under SaaS, the provider delivers software applications hosted on its cloud infrastructure and makes them available to customers, typically through a web interface or other client application.8 The provider is responsible for managing the underlying infrastructure, platform and application environment, while the customer generally interacts with and configures the application within the functionality made available by the provider.9
Footnotes
1 W Kuan Hon, Christopher Millard and Jatinder Singh, ‘Cloud Technologies and Services’ in Christopher Millard (ed) Cloud Computing Law (2nd edn, Oxford University Press 2021), p. 4.
2 ibid.
3 ibid 6.
4 ibid.
5 ibid 6 – 7.
6 ibid 6.
7 ibid 15.
8 ibid 15 – 16.
9 ibid 16.
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