Are we relying too much on US big tech?

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

For users, the impacts ranged from the serious – such as not being able to access vital banking, government or work services – to the not-so-serious, such as fears of losing long built-up streaks on Duolingo.

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

Should we worry that an issue occurring at the heart of Amazon’s cloud computing operations in Virginia badly affected UK firms and services such as Lloyds Bank and HMRC – and what, if anything, can we do about it?

Amazon has embedded itself within the very fabric of cloud-based computing, the infrastructure that underpins the delivery of the IT systems which are so much a part of all our lives.

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

But even that figure doesn’t fully capture how significant they are.

Because even if a service itself is not hosted by one of these two giants – or the UK’s third largest provider, Google – critical things it relies upon still might be.

“A cloud deployment is a complicated piece of infrastructure with many components, some 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 the “nested dependency” between popular digital platforms and the array of services providing the web’s technical underpinnings.

He also said it underscored the risks inherent in that dependency.

“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,” he said.

“It’s a feature of a highly concentrated risk where even small service outages can ripple through the global economy.”

Those ripples are what millions of users felt on Monday.

So, if relying on a small number of US firms has its risks, why do so many companies do it?

The answer, experts say, is that inking contracts with household names such as Amazon, Microsoft or Google also has its upsides.

It means a company doesn’t have to pay hefty costs to run its own servers, and can leverage the power of so-called hyperscalers to handle fluctuations in site traffic – as well as benefit from heightened cyber-security.

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

Or, put another way, reducing the current dependence on US tech giants and creating a more “sovereign” infrastructure would come with a high price tag.

With the likes of Amazon and Microsoft already embedded in many different aspects of digital operations, companies looking to migrate elsewhere or diversify may face challenges, said Stephen Kelly of Circata.

“The explosion of enterprise data now stored with a single provider like AWS makes the eventual cost of migrating to different vendors prohibitively high,” he said.

Cybersecurity expert Thomas Hyslip, who currently teaches at University of South Florida, said that there was another benefit to the dominance of US firms.

“Of all the places for it to be, I think it’s best it’s in the US because you don’t have a lot of government interference,” he said.

Still, that concentration could invite government intervention, he added.

“If god forbid there was ever another war involving the US and some other countries, there could be the opportunity for the government to interject themselves and cause problems for whoever the enemy was at that point,” he said.

Nonetheless there is unease about the status quo.

The dominance of a few small companies has come to define much of the tech industry at large – from social media to streaming

And in the cloud sector, some believe this may mean smaller providers can be overlooked or ignored.

Nicky Stewart, senior advisor to the Open Cloud Coalition, has joined lots of other experts in saying Monday’s outage showed “the risks of over-reliance on two dominant cloud providers, an outage most of us will have felt in some way”.

The CMA said in July its investigation into competition in the UK cloud services market had found it was “not working well”.

The regulator recommended it use its own recently-acquired powers to investigate whether to designate Amazon and Microsoft as having “strategic market status” – which would allow it to demand changes to boost competition.

Ms Stewart said events like the AWS outage demonstrate the need for “a more open, competitive and interoperable cloud market; one where no single provider can bring so much of our digital world to a standstill”.

“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,” she said.

Mr Kelly, meanwhile, said the potential “difficulty” of diversifying cloud providers should not overshadow the urgent need for IT resilience.

Ultimately, he said, the solution was political.

“The UK government should also take the lead in mandating data resilience standards across key industries, including policy frameworks that require the use of two or more distinct cloud providers and promote continuous data replication,” he said.

Lord Leong, speaking on behalf of the government in the House of Lords on Tuesday, said it was in contact with AWS about how it would mitigate outages in future.

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