Infrastructure and numerous cloud services from Amazon, Google and Microsoft accounted for 65% of the $53 billion in cloud-related spending in the first quarter of 2022. According to the analyst Synergy Research Group, the three behemoths dominate the market, preventing smaller companies from standing out. Their cloud activities will continue to grow in the coming years, which is already worrying regulators.
Small cloud companies don’t measure up
The development of remote work during the covid-19 pandemic has largely contributed to grow the cloud computing industry. This situation has mainly benefited already well-established players. Amazon, along with AWS, now accounts for 33% of cloud spend. Microsoft, with Azure, is at 22%, followed by Google Cloud which accounts for 10% of spending. Synergy Research Group reports that four years ago, the three companies were at 52% of overall spend.
The development of the cloud depends on very expensive infrastructures, such as data centers. The tech giants therefore find it easier to invest in order to develop their activities. In 2021, Google and Amazon even started to make their own chips to equip their servers, which is not to the liking of American manufacturers such as Intel and Nvidia. In this way, they further consolidate their cloud dominance.
Small businesses are the first to suffer the consequences. Investors want to take as little risk as possible, preferring to turn to sure values. Customers will also choose industry leaders because they are often more reliable and their services offer more features.
The Big 3 account for 65% of cloud spend. Image: Synergy Research Group.
Regulators are concerned about the risk of monopoly
In the current economic environment, Google Cloud Chief Executive Thomas Kurian said cloud-related services remain important, while other technology sectors are experiencing a sharp downturn. ” We still have strong demand and interest from customers around the world in almost every industry. “, he explained to the wall street journal.
This maintenance of the cloud despite inflation and the concentration exerted by the leaders of tech in this sector are now worrying the antitrust authorities. Last April, the European Commission sent a questionnaire several cloud companies to determine whether Microsoft’s position poses anti-competitive risks in Europe. A coalition of European companies had filed a complaint with the European Union in 2021, for the pre-installation of cloud storage software, OneDrive, on Windows.
