LONDON (Reuters) -Amazon and Microsoft's dominant position in cloud computing is having 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, which are conducted by its Digital Markets Unit (DMU), until early next year.

Google is the third main cloud services provider, but it has a much smaller share than its rivals.

Microsoft said the report "misses the mark again, ignoring that the cloud market has never been so dynamic and competitive, with record investment, and rapid, AI-driven changes".

"Its recommendations fail to cover Google, one of the fastest-growing cloud market participants," a Microsoft spokesperson said.

"Microsoft looks forward to working with the Digital Markets Unit toward an outcome that more accurately reflects the current competition in cloud that benefits UK customers."