A few days following a significant outage at Amazon’s cloud service provider AWS that resulted in widespread disruptions for millions of users across various popular websites and applications, concerns persist about the heavy reliance on a select few companies and the challenges in preventing future outages.
Similar to past incidents such as the CrowdStrike outage from last year and the 2022 Rogers outage, the disruption on Monday underscored the extensive economic dependencies on a single entity. Notable platforms like Snapchat, Pinterest, Reddit, Spotify, Starbucks app, DoorDash, Grubhub, Lyft, Venmo, Zoom, Netflix, Disney+, Prime Video, WhatsApp, Signal, and U.K. government websites experienced service disruptions.
As pointed out by Atlantic writer Will Gottsegen, while technical outages are not uncommon, the current scenario highlights how a setback for Amazon can have far-reaching consequences. Amazon Web Services holds a substantial share of the global cloud services market, with Microsoft Azure and Google Cloud following closely behind, collectively dominating over 60% of the market.
Various factors contribute to companies achieving significant market shares, including early innovation advantages and allegations of anti-competitive practices. The U.K.’s competition regulator raised concerns about AWS’s market influence, while Amazon faced scrutiny over monopoly issues in the U.S., leading to a substantial settlement this year.
The concentration of market power in a single or a few companies can lead to fragility and lack of resilience in the economy, according to Robin Shaban from the Canadian Anti-Monopoly Project. Quick growth in digital sectors like ridesharing and social media is propelled by network effects, resulting in market domination by a single entity.
Mergers, acquisitions, and vertical integration strategies also contribute to the rise of giant corporations. While some markets in Canada are dominated by a few major players, excessive competition without consumer demand can create unsustainable conditions.
Vass Bednar from the Canadian SHIELD Institute emphasizes that market dominance isn’t inherently negative, and the focus should be on effective competition rather than the number of competitors. She highlights the importance of understanding market dynamics and structural evolution over time to address barriers to entry and promote fair competition.
In the face of inevitable outages like the recent AWS incident, sectors deemed critical incorporate redundancies to prevent catastrophic consequences. The need for backup infrastructure and collaboration among providers in critical sectors is crucial to ensure continuity in services.
As the discussion around foreign-owned infrastructure and digital sovereignty gains traction, there is a growing awareness of the interdependence and the need for domestic investments in digital infrastructures to bolster resilience.
