AWS Outage Overview
The recent outage of Amazon Web Services (AWS) made headlines worldwide when it disrupted access to several major online platforms for hours on Monday. The implications ranged from severe inconveniences, such as inaccessible banking and government services, to minor troubles like concerns over losing progress on applications like Duolingo.
This incident has reignited discussions about the extent to which countries, including the UK, depend on a select few US technology companies. Stakeholders are questioning whether the disruption stemming from AWS’s Virginia operations, which affected major UK services such as Lloyds Bank and HMRC, warrants action.
Analyzing Market Dominance
Amazon has firmly established itself as a leader in cloud computing, which is essential for the infrastructure supporting various IT systems vital to everyday life. According to the UK’s Competition and Markets Authority (CMA), Amazon and Microsoft’s Azure cloud services together command approximately 30 to 40 percent of the market in the UK and Europe. However, their influence extends far beyond these numbers.
As Professor James Davenport, the Hebron and Medlock Professor of Information Technology at the University of Bath, explained, “A cloud deployment is a complicated piece of infrastructure with many components, some invisible.”
Brent Ellis, principal analyst at Forrester, described the outage as a revelation of the “nested dependency” between prevalent digital platforms and the supporting services. He cautioned about the risks associated with such dependency, noting, “There’s great appeal to using tech giants, but assuming they are too big to fail or inherently resilient is a mistake, with the evidence being the current outage and past ones. It’s a feature of a highly concentrated risk where even small service outages can ripple through the global economy.”
Understanding Economies of Scale
While the risks of relying on a limited number of US tech firms are evident, companies continue to engage their services due to the various advantages they offer. Engaging with established names like Amazon, Microsoft, or Google allows organizations to avoid substantial expenses related to operating their own servers and benefit from enhanced cybersecurity and traffic management capabilities.
Vili Lehdonvirta, a professor of technology policy at Aalto University, emphasized that the tech industry is fundamentally “driven by economies of scale.” Shifting away from reliance on major US providers to create a more independent infrastructure could entail significant costs.
According to Stephen Kelly from Circata, the extensive amount of enterprise data currently housed with a single provider like AWS makes the prospect of migrating to different vendors daunting and costly.
Calls for Fair Competition
Despite the clear advantages, there is growing apprehension about the current scenario. The tech industry is significantly influenced by a small number of large companies, raising fears that smaller providers may be overlooked. Nicky Stewart, a senior advisor to the Open Cloud Coalition, remarked that Monday’s outage highlighted the dangers of excessive reliance on two major cloud providers, a disruption felt by many.
The CMA noted in July that its examination of the UK’s cloud services market revealed that it was “not working well.” The authority recommended using its new powers to investigate designating Amazon and Microsoft as having “strategic market status” to facilitate changes aimed at enhancing competition.
Stewart called for a more open and competitive cloud market that minimizes dependency on a single provider, stating, “Fair and open competition will enable the UK to diversify its cloud workloads, strengthen our national resilience and allow UK challenger cloud providers to bring their talent and innovation to this over-concentrated and unhealthy market.”
Kelly added that while diversifying cloud providers may be challenging, improving IT resilience is critical. He proposed that the UK government should take the lead in establishing data resilience standards across essential industries, emphasizing the need for policies that promote the use of multiple distinct cloud providers and ongoing data replication.
In response to the outage, Lord Leong addressed peers in the House of Lords, stating that the government is in discussion with AWS regarding future mitigation plans. “We are working to diversify the UK’s cloud ecosystem and encourage greater participation by UK-based and European providers,” he confirmed.
