Are we relying too much on US big tech?

The Amazon Web Services (AWS) outage made global headlines on Monday after some of the world's largest websites were taken offline for several hours.

For users, the consequences ranged from serious (such as the inability to access vital banking, government, or work services) to not so serious, such as the fear of losing long accumulated streaks on Duolingo.

But the outage has also renewed debate over whether countries including the UK are overly dependent on a handful of US tech companies.

Should we be worried that the problem at Amazon's cloud computing operations center in Virginia is seriously affecting UK firms and services such as Lloyds Bank and HMRC – and what can we do about it?

Amazon has embedded itself in the very fabric of cloud computing, the infrastructure that underlies the delivery of IT systems that are an integral part of our lives.

The company and Microsoft Azure cloud services have 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 this figure does not fully reflect their significance.

Because even if the service itself isn't hosted by either of these two giants (or the UK's third-largest provider, Google), the critical things it relies on still might be.

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

Brent Ellis, chief analyst at research firm Forrester, said the outage exposed what he called a “nested dependency” between popular digital platforms and the set of services that provide the technical backbone of the Internet.

He also said it highlights the risks inherent in the addiction.

“Attracting tech giants is very attractive, but believing they are too big to fail or inherently resilient is a mistake, as evidenced by current and past failures,” he said.

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

It was this wave that was felt by millions of users on Monday.

So if relying on a small number of US firms is risky, why are so many companies doing it?

The answer, according to experts, is that signing contracts with well-known brands such as Amazon, Microsoft or Google also has its advantages.

This means the company doesn't have to pay the huge costs of running its own servers and can leverage the power of so-called hyperscalers to handle fluctuations in site traffic, and often benefit from increased cybersecurity.

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

Or, in other words, reducing the current dependence on American tech giants and creating a more “sovereign” infrastructure will come at a high price.

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

“The insane growth of enterprise data now stored in a single provider such as AWS makes the ultimate cost of switching to other providers prohibitive,” he said.

However, there is concern about the status quo.

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

And in the cloud sector, some believe this could mean smaller vendors could be overlooked or ignored.

Nicky Stewart, a senior adviser at the Open Cloud Coalition, joined many other experts in saying Monday's outage demonstrated “the risks of over-reliance on two dominant cloud providers, a disruption that most of us will feel to some degree.”

SMA said in July An investigation into competition in the UK cloud services market has found that it is “not performing very well”.

The regulator recommended that he use his newly acquired powers to examine whether Amazon and Microsoft should be designated as having “strategic market status,” which would allow him to demand changes to enhance competition.

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

“Fair and open competition will enable the UK to diversify its cloud workloads, strengthen our national resilience and enable UK cloud providers to bring their talent and innovation to this overly concentrated and unhealthy market,” she said.

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

Ultimately, he said, the decision was political.

“The UK government should also take a leadership role in setting standards for data resiliency across key industries, including policy frameworks that require the use of two or more separate cloud providers and promote continuous data replication,” he said.