There are ways to mitigate some of the risks of relying so much on cloud computing, says this University of Melbourne researcher.
The world’s largest cloud computing platform, Amazon Web Services (AWS), experienced a major outage that has impacted thousands of organisations, including banks, financial software platforms such as Xero, and social media platforms such as Snapchat.
The outage occurred on Monday (Oct 20). It was caused by a malfunction at one of AWS’ data centres located in Northern Virginia in the United States. Later in the day, AWS said it had fixed the underlying issue but some internet users were still reporting service disruptions at the time of writing.
This incident highlights the vulnerabilities of relying so much on cloud computing – or “the cloud” as it’s often called. But there are ways to mitigate some of the risks.
RENTING IT INFRASTRUCTURE
Cloud computing is the on-demand delivery of diverse IT resources such as computing power, database storage, and applications over the internet. In simple terms, it’s renting (not owning) your own IT infrastructure.
Cloud computing came into prevalence with the dotcom boom in the late 1990s, wherein digital tech companies started to deliver software over the internet. As companies such as Amazon matured in their own ability to offer what’s known as “software as a service” over the web, they started to offer others the ability to rent their virtual servers for a cost as well.
This was a lucrative value proposition. Cloud computing enables a pay-as-you-go model similar to a utility bill, rather than the huge upfront investment required to purchase, operate and manage your own data centre.
As a result, the latest statistics suggest more than 94 per cent of all enterprises use cloud-based services in some form.
A MARKET DOMINATED BY THREE COMPANIES
The global cloud market is dominated by three companies. AWS holds the largest share (roughly 30 per cent). It’s followed by Microsoft Azure (about 20 per cent) and Google Cloud Platform (about 13 per cent).
All three service providers have had recent outages, significantly impacting digital service platforms. For example, in 2024, an issue with third-party software severely impacted Microsoft Azure, causing extensive operational failures for businesses globally.
Google Cloud Platform also experienced a major outage this year due to an internal misconfiguration.
PROFOUND RISKS
The heavy reliance of the global internet on just a few major providers – AWS, Azure and Google Cloud – creates profound risks for both businesses and everyday users.
First, this concentration forms a single point of failure. As seen in the latest AWS event, a simple configuration error in one central system can trigger a domino effect that instantly paralyses vast segments of the internet.
Second, these providers often impose vendor lock-in. Companies find it prohibitively difficult and expensive to switch platforms due to complex data architectures and excessively high fees charged for moving large volumes of data out of the cloud (data egress costs). This effectively traps customers, leaving them hostage to a single vendor’s terms.
Finally, the dominance of US-based cloud service providers introduces geopolitical and regulatory risks. Data stored in these massive systems is subject to US laws and government demands, which can complicate compliance with international data sovereignty regulations such as Australia’s Privacy Act.
Furthermore, these companies hold the power to censor or restrict access to services, giving them control over how firms operate.
