Are we relying too much on US big tech?

The Amazon Web Services (AWS) outage on Monday made global headlines after taking some of the world’s largest sites offline for hours.

Impacts for users ranged from serious impacts, such as the inability to access vital banking, government or business services, to not-so-serious impacts, such as the fear of losing long streaks accumulated on Duolingo.

But the outage has also reignited debate over whether countries, including the UK, are overly reliant on a handful of US tech firms.

Should we be concerned that an issue at the headquarters of Amazon’s cloud computing operations in Virginia is badly affecting UK firms and services such as Lloyds Bank and HMRC, and what, if anything, can we do about it?

Amazon has embedded itself in the fabric of cloud-based computing, the infrastructure that supports the delivery of IT systems that are a huge part of our lives.

The company and Microsoft’s cloud services Azure have captured 30 to 40% of the market in the UK and Europe, according to the UK market regulator Competition and Markets Authority (CMA).

However, even this figure does not fully reflect how important these are.

Because even if a service itself isn’t hosted by either of those two giants, or Google, the UK’s third-largest provider, there may still be critical things it relies on.

“Cloud deployment is a complex piece of infrastructure made up of many components, some of which are invisible,” said Prof James Davenport, Hebron and Medlock Professor of Information Technology at the University of Bath.

Brent Ellis, principal analyst at market researcher Forrester, said the outage exposed what he called “interdependencies” between popular digital platforms and the array of services that provide the technical foundation of the web.

It also highlights the risks inherent in this addiction, he said.

“There is great appeal in using tech giants, but it is a mistake to assume that they are too big or inherently resilient to fail; the evidence is current and past disruptions,” he said.

“This is a feature of highly concentrated risk, where even small service disruptions can ripple through the global economy.”

These fluctuations are what millions of users felt on Monday.

So, if there are risks to relying on a small number of U.S. firms, why are so many companies doing it?

Experts say that the answer to this question is that contracts made with well-known names such as Amazon, Microsoft or Google also have positive aspects.

This means a company won’t have to pay high costs to run its own servers and can leverage the power of hyperscalers to deal with fluctuations in site traffic, as well as often benefit from increased cybersecurity.

Vili Lehdonvirta, professor of technology policy at Aalto University in Finland, told the BBC that the sector is essentially “driven by economies of scale”.

Or to put it another way, reducing the current dependence on US tech giants and creating a more “independent” infrastructure will come at a high price.

Circata’s Stephen Kelly said companies looking to move elsewhere or diversify could face challenges, as companies like Amazon and Microsoft are already established in many different aspects of digital operations.

“The explosion of enterprise data now stored in a single vendor like AWS makes the ultimate cost of moving to different vendors prohibitively high,” he said.

However, there is discomfort with the status quo.

The dominance of a few small companies has come to define much of the tech industry overall, from social media to streaming.

In the cloud industry, some believe this could mean smaller providers may be overlooked or ignored.

Nicky Stewart, senior counsel at the Open Cloud Coalition, joined many other experts in saying Monday’s outage demonstrates “the risks of over-reliance on the two dominant cloud providers, an outage that most of us will feel in some way.”

CMA said in july Its investigation into competition in the UK cloud services market found that this market was “not working well”.

The regulator recommended it use its recently acquired powers to investigate whether Amazon and Microsoft should be designated as having “strategic market status”; this would allow him to request changes to increase competition.

Ms. Stewart said events such as the AWS outage showed the need for “a more open, competitive and interoperable cloud market; a cloud market where no single provider can stop so much of our digital world.”

“Fair and open competition will enable the UK to diversify cloud workloads, strengthen our national resilience and bring the capabilities and innovations of the UK’s rival cloud providers to this over-concentrated and unhealthy market,” he said.

Meanwhile, Mr Kelly said the potential “challenge” of diversifying cloud providers should not overshadow the urgent need for IT flexibility.

Ultimately, he said, the solution is political.

“The UK government should also take the lead in making data resiliency standards mandatory across key industries, including policy frameworks that require the use of two or more different cloud providers and encourage continuous data replication,” he said.

Lord Leong, speaking on behalf of the government in the House of Lords on Tuesday, said he was in contact with AWS about how to reduce outages in the future.

“We are working to diversify the UK’s cloud ecosystem and encourage greater participation from UK-based and European providers,” he told colleagues.