The UK’s Competition and Markets Authority (CMA) recently ruled that, in its current state, the cloud storage market is anti-competitive – thanks, in part, to the long-term domination of the sector by the three so-called ‘hyperscalers’. Amazon Web Services (AWS), Google Cloud and Microsoft Azure have had a tight grip on the cloud industry for too long, forcing customers to pay fees for accessing their data and making it prohibitively difficult to switch providers.
The CMA investigation has been an overdue opportunity to advocate for transparency, data ownership and predictable pricing in the cloud. Today, businesses face significant barriers in accessing and utilising their own data as the hyperscalers essentially keep their customers’ data hostage while making money from it, intentionally preventing a competitive and customer-centric cloud industry for their own financial gain.
Where is the cloud market falling short?
Technical barriers, high egress fees and discount mechanisms that tie customers to a certain provider have long been criticised by the wider industry, but now too by regulators, as preventing a competitive cloud market. Fees from API calls, data outflows and data retrieval frequently account for more than the cost of the storage itself and, as these fees are dependent on how the data is used throughout the month, they obfuscate cost predictability and pose a budgeting challenge.
The fees charged by hyperscalers lead to hidden costs and complicated pricing models, ultimately prohibiting the free flow of information. Egress fees, which are incurred when data is withdrawn from a cloud provider’s infrastructure, are particularly problematic as they inhibit customers from accessing and moving their own data. This practice not only hinders competition but also curtails innovation. As a result, companies often find themselves dependent on their cloud provider – known in the industry as vendor lock-in. Essentially a power play from the hyperscalers, customers lose any flexibility to benefit from the innovation and developments of other providers, as well as being unable to react to changing requirements for their storage.
Another anti-competitive practice is the bundling of commodity services, like storage and compute, with proprietary services offered by the vendors, like voice recognition, analytics, and blockchain services. The hyperscalers have tried to create walled gardens and they want to discourage customers from piecing together solutions from a variety of vendors. This kind of potentially predatory pricing and bundling makes it difficult for customers to assemble a solution from multiple vendors, choosing best-of-breed services from each vendor.
What would a fair cloud market look like?
Regulators need to enforce cloud storage models that, by default, enable easy data export and transfer. Businesses should be able to access and manage their data at any time without being punished and use their data flexibly according to their operational requirements. With the help of data management tools and interfaces, it should also be possible to seamlessly integrate their data into their workflows. This way, companies always have full control over their own data, regardless of which corporation owns their cloud infrastructure. To uphold this basic principle of autonomous data ownership, appropriate guidelines and recommendations from regulatory bodies are of great importance.
The total cost of cloud storage should be transparent and plannable; customers need to know what their bill will look like at the end of the month. In this effort, cloud providers should provide their customers with the tools to calculate their costs on a daily, monthly or annual basis, so that they can plan and optimise their data analyses accordingly. Features such as automatic alerts for unusual spending patterns and dashboards that consolidate spending data help to effectively keep track of cloud costs. This helps businesses ensure their data is available in the right place at the right time and at the optimal cost, contributing to more efficient processes and better control of financial risk.
Transparent, predictable costs and full control over one’s own data are fundamentals to creating a fair cloud market moving forward. Only with these properties in place can businesses fully understand the cloud offerings available to them and make decisions based on their performance and cost. This, in turn, fosters competition among providers, supports the development of new cloud solutions and ultimately leads to broader cloud adoption across all industries. Collaboration in the channel will be strengthened, and businesses will benefit from the opportunity to use their data freely – all without having to worry about hidden fees.
Kevin Dunn is the vice president and EMEA general manager for Wasabi
Read more: Why widespread enterprise AI adoption depends on open-source
