An infrastructure that is worth billions of dollars, privately-owned is currently essential to the modern internet economy. That will scare you.
WE SPENT A lot of years talking about net neutral, the idea that companies that provide Internet access should not block, slow down, or interfere with traffic even if that traffic is competing with their services. But there is a greater problem of beer production, and it’s time to start talking about it: the neutral of the cloud.
While its name sounded soft and smooth, the Chairman and general counsel of Brad Microsoft and co-author Carol Ann Browne writes in their recent book, Tools, and Weapons: the promise and the dangers of the digital era, in fact, the cloud is a fortress. Their introduction describes the magic of the data center: a 2 million square meter wide climate control facility made up of massive generators, diesel fuel tank, battery array, and bulletproof door. In its center is what they call a temple of the information era and the foundation of our digital life. Thousands of machines are connected to the fastest possible Internet connection, providing storage and peripheral computing capabilities for businesses that cannot afford hardware for all storage and computing power.
Smith and Browne noted that Microsoft operates or rents over 100 such establishments in more than 20 countries and hosts at least 200 online services. Each data center costs hundreds of millions of dollars to build and many million to maintain; And you can build a successful new company without them. So thanks for Microsoft, right?
The book means describing this power and strength as a source of wonders and is a feature that allows the modern economy. For me, it reads like a threat. The cloud economy exists in the joy and continued profits, of a handful of companies.
The Internet is no longer the essential determinest of the technology economy. The title now belongs to the cloud. But the Internet infrastructure, at least, has been publicly funded and subscribed. The government can set rules on how companies must interact with their customers. Whether now and how it establishes and executes rules that are not the main point. It can.
That’s not the case with the cloud. This infrastructure is only owned by a handful of companies with virtually no oversight. The possibility of abuse is enormous, whether it is possible through the trade secret or blocking completely, slowing down, or obstructing the transmission. Nobody seems to think of what could have happened if these giants decided that contrary to their benefit to have all these dogs hunt on the side. They should be.
Almost every modern technology company is paying to outsource its hosting and computing services, all or in part, to the cloud. This setting allows startups to emerge with very little cost and large companies to operate more efficiently by avoiding investing in physical hardware. It has given birth to a generation of companies that plan to use the cloud to provide everything as a service.
But turning the transaction forward and you realize that companies actually build and operate the cloud is essentially incubating and organizing their competition. An easy-to-understand example? Netflix runs its streaming video products on the Amazon cloud-based Web service; Indeed, it has been praised a lot for saving money using all in-game games on AWS in 2009 and 2010. Amazon began its own streaming service in 2011. The two have coexisted for a decade now, but the ruthless Amazon is famous for how long it will endure. The situation?
The problem is that very few people have resources to replicate the cloud infrastructure, so the landlord suddenly turns on a tenant.
The three major cloud providers in the world are Amazon, Google, and Microsoft. Together, they spent tens of billions of dollars on the data center infrastructure. And to be clear, they have obtained great profits from those investments. Last week, in fact, Alphabet has revealed revenue to cloud services for the first time: it accounted for nearly 9 billion dollars in the company’s quarterly earnings of 37.57 billion, up more than 50% compared to the year 2018. Amazon’s AWS business has earned nearly $10 billion and Microsoft’s Azure business earns nearly 12 billion dollars. The cloud is a market worth $141 billion in 2018.
These figures are a great motivation for cloud providers to play well with all the companies they serve. However, there is still every reason for tenants to start thinking about their flaws. There are several ways to improve risk. To see the News of business computing for a minute, the biggest trend in cloud services is the hybrid cloud, on which companies control part of their own infrastructure and lease the rest. This can help protect organizations that have resources to provide some of their infrastructures. But that’s not enough. Given that the cloud has become so important for a huge technological economy, we should probably wonder if this infrastructure is in the hands of several trillion-dollar companies.
I had the opportunity to ask Brad Smith’s Microsoft Walker about this concern before an interview on the stage lately, just to examine the thesis. He allowed full abusive potential to exist, even if it wasn’t in hosting companies. However, consider where things are aiming: controlling the market for cloud services and competitive means. The group is consolidating under some technology giants who have enough money to cover the globe with data centers.
I acknowledge that it is difficult to imagine a set of cloud-neutral regulations that might look like. After all, this is an unprecedented situation. It will be as if Ford, GM, and Toyota have built the federal highway system using private dollars and then charged for other automobile manufacturers to use it.
Capitalism, and perhaps the threat of further anti-proprietary investigations, can get people to queue in a short time; But cloud-based companies are still renting the ground in dragon-Dragon caves. If the alphabet, Amazon, and Microsoft hit another way, the better to make money, then the natural rule will surely dominate: those things will be swallowed.