Are we too dependent on big American technology?

The Amazon Web Services (AWS) outage made headlines around the world on Monday after knocking some of the world’s largest sites offline for hours.

For users, the impacts ranged from the most serious – such as the inability to access vital banking, government or business services – to the less serious, such as the fear of losing long sequences accumulated on Duolingo.

But the outage also reignited debate over whether countries, including the United Kingdom, are too dependent on a handful of American technology companies.

Should we be concerned that a problem at the heart of Amazon’s cloud computing operations in Virginia could seriously affect UK businesses and services such as Lloyds Bank and HMRC – and what, if anything, can we do about it?

Amazon has integrated itself into the fabric of cloud computing, the infrastructure that underpins the delivery of the computing systems that are so much a part of our lives.

The company and Microsoft’s cloud services, Azure, each have between 30 and 40 percent of the market in the UK and Europe, according to the UK’s markets regulator, the Competition and Markets Authority (CMA).

But even this figure does not fully reflect their importance.

Because even if a service itself isn’t hosted by one of these two giants – or by the UK’s third-largest provider, Google – the critical elements it relies on may still be.

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

Brent Ellis, principal analyst at Forrester, said the outage exposed what he called the “nested dependency” between popular digital platforms and the range of services providing the technical foundations of the web.

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

“The reliance on tech giants is very attractive, but assuming they are too big to fail or that they are inherently resilient is a mistake, the proof being the current outage and past outages,” he said.

“This is a characteristic of highly concentrated risk where even small service outages can ripple through the global economy.”

These repercussions are what millions of users felt on Monday.

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

According to experts, the answer is that signing contracts with well-known names like Amazon, Microsoft or Google also has advantages.

This means that a business does not have to pay high costs to manage its own servers and can leverage the power of hyperscalers to handle fluctuations in site traffic, while benefiting from enhanced cybersecurity.

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

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

With companies like Amazon and Microsoft already integrated into many different aspects of digital operations, companies looking to migrate elsewhere or diversify could face challenges, said Circata’s Stephen Kelly.

“The explosion of enterprise data now stored with a single vendor like AWS makes the potential cost of migrating to different vendors prohibitive,” he said.

Cybersecurity expert Thomas Hyslip, who currently teaches at the University of South Florida, said there is another benefit to the dominance of American companies.

“Of all the places this is happening, I think the best is in the United States, because there’s not a lot of government interference,” he said.

However, this concentration could prompt the government to intervene, he added.

“If God forbid there is another war involving the United States and other countries, the government might have the opportunity to intervene and cause problems for the enemy at that time,” he said.

There is, however, unease 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 industry, some believe this could mean smaller providers could be overlooked or ignored.

Nicky Stewart, senior advisor to the Open Cloud Coalition, joined many other experts in saying Monday’s outage showed “the risks of over-reliance on two dominant cloud providers, a breakdown that most of us will have felt in one way or another.”

The CMA said in July that its competition investigation into the UK cloud services market found it was “not working well”.

The regulator recommended it use its own recently acquired powers to investigate whether Amazon and Microsoft should be designated as having “strategic market status”, which would allow it to demand changes to boost competition.

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

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

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

Ultimately, he says, the solution is political.

“The UK government should also take the lead in imposing data resilience standards across key sectors, including policy frameworks that require the use of two or more separate cloud providers and promote continuous data replication,” he said.

Lord Leong, speaking on behalf of the government in the House of Lords on Tuesday, said he was in contact with AWS about how to mitigate outages in the future.

“We are working to diversify the UK’s cloud ecosystem and encourage greater participation from UK-based and European providers,” he told his peers.