A significant outage at Amazon Web Services (AWS) on Monday disrupted global digital operations, bringing some of the world’s largest websites and services offline for hours. The incident affected a wide range of users, from those unable to access critical banking and government services to individuals concerned about losing streaks on language-learning app Duolingo. This disruption has reignited concerns about the over-dependence of countries, including the UK, on a handful of US tech giants for cloud computing services.
Amazon and Microsoft dominate the cloud services market, collectively holding between 30% and 40% of the UK and European markets, according to the UK’s Competition and Markets Authority (CMA). However, their influence extends even further, as many services not directly hosted by these companies still rely on their infrastructure. Professor James Davenport of the University of Bath explained that cloud deployments are complex, with many interdependent components, some of which are invisible to users.
The outage highlighted the ‘nested dependency’ between digital platforms and the underlying technical services that support them, according to Brent Ellis, principal analyst at Forrester. He warned that the assumption that tech giants are ‘too big to fail’ is a mistake, as even minor outages can have far-reaching consequences. The incident underscored the risks of a highly concentrated market, where a single failure can ripple through the global economy.
Despite these risks, many companies continue to rely on AWS, Microsoft, and Google due to the significant advantages they offer, including cost savings, scalability, and enhanced cybersecurity. Vili Lehdonvirta, a professor of technology policy at Aalto University, noted that the sector is driven by economies of scale, making it difficult for smaller providers to compete. Stephen Kelly of Circata added that the high cost of migrating data from one provider to another poses a significant barrier to diversification.
However, there is growing unease about the dominance of a few companies in the cloud sector. Nicky Stewart of the Open Cloud Coalition argued that the outage demonstrated the need for a more open and competitive market. The CMA has also raised concerns, recommending in July that Amazon and Microsoft be investigated for ‘strategic market status’ to promote fair competition.
Lord Leong, speaking on behalf of the UK government, emphasized efforts to diversify the UK’s cloud ecosystem and encourage greater participation by UK-based and European providers. Experts like Kelly called for political action, urging the government to mandate data resilience standards and promote the use of multiple cloud providers to enhance national resilience.