- Cloud concentration is becoming a huge concern
- AI could compel regulators to take action to allow enterprises to store their data in one cloud and seamlessly run inference workloads in another
- Absent regulatory action, there's not much incentive for cloud companies to change their ways
We’ve written about egress fees before. Many times. But while egress fees may have faded into the background after the hyperscalers made some half-hearted olive branch offerings, they’re just a symptom of a much larger disease that has proliferated across the cloud: concentration.
You see, egress fees are just one of the tools cloud providers have used to keep companies locked into their environments. See also: toxic licensing practices and product freebies that are only free so long as you use a certain cloud.
This has led to cloud concentration, an issue which is returning to the fore as companies look to leverage their data for artificial intelligence (AI).
“We’re seeing real challenges when companies think about how they want to use their data” for AI, according to Akamai’s VP of Cloud Computing and Delivery Product Marketing Ari Weil. The big question for those who have operations, compliance and governance policies all focused on one cloud is “what happens if you want to run inference somewhere else?”
“There’s going to be a tax to access your data; there’s going to be issues if you want to migrate pieces of your infrastructure off,” Weil said. That’s because while hyperscalers made it free for companies to move completely off their cloud environments, egress fees for everyday data transfers still exist. Thus, AI could end up being a driver of regulatory action on this front, Weil said.
It’s worth noting that concentration also comes with other big risks for companies. For instance, those reliant on a single cloud could find themselves in the lurch if there’s a data breach or outage that impacts their ability to deliver services. And that fact hasn’t escaped notice.
Late last year, Gartner pointed to cloud concentration as one of the top five emerging risk factors for enterprises. “There aren’t many obvious ways to avoid concentration risk while keeping the benefits of cloud services,” Ran Xu, research director for Gartner’s Legal Risk & Compliance Practice, said at the time.
The U.S. Federal Trade Commission also spotlighted the potential negative impacts of egress fees and concentration in a November 2023 report. And in a July 2024 report, the U.S. Treasury Department highlighted concerns about how market concentration might impact the financial sector specifically.
“Concentration could expose many financial services clients to the same set of physical or cyber risks,” the report stated. However, the Treasury Department noted that “data limitations prevent Treasury and the FBIIC from fully assessing the significance of the concentration in cloud services across the sector,” and it added that further study is needed.
Meanwhile, the U.K. recently opted to extend its own yearlong probe into cloud competition after an initial report raised additional concerns about the harm caused by egress fees, licensing practices and minimum spending agreements.
Weil said the cloud could take a page from the content delivery network (CDN) playbook. CDNs, he said, make it easy for customers to shift traffic from one CDN to another, divvy up traffic across multiple CDNs or failover from one to another because they have a common foundation. But while Kubernetes is a common foundational element of the cloud, hyperscalers have wrapped it in proprietary technology that makes it impossible to seamlessly failover or migrate without “significant either procedural implications, time or cost.”
Kubernetes could end up being the answer, but Weil said it’ll likely take regulatory action to force cloud companies to peel away their proprietary wrappers.
So, is it too late to fix the cloud? No, but it seems there’s little incentive to do so without a solid push.