LONDON, July 31 (Reuters) - Amazon ( AMZN ) and

Microsoft's ( MSFT ) dominant position in cloud computing has an

adverse effect on competition, exacerbated by technical and

commercial barriers to switching, an inquiry group from

Britain's antitrust regulator said.

The Competition and Markets Authority (CMA) inquiry group

said on Thursday the regulator should investigate whether to

consider designating the two companies with strategic market

status (SMS) in cloud services, which would give it power to

impose tailored conditions.

It noted, however, that the CMA has said it will not

consider launching future SMS investigations until early next

year.

Google is the third main cloud services provider,

but it has a much smaller share than its rivals.