Cloud neutrality: have cloud providers become too powerful?

As entire industries quickly move to the cloud, more people rely on three leading cloud service providers. As of now, there is no regulation that could prevent Amazon, Microsoft, or Google from shutting down competing businesses that are hosted on their cloud services. Should we be worried?

After angry Americans stormed the Capitol building this January, researchers found that right-wing social network Parler was among the key spots to plan the infamous Capitol Riots. Reacting to what some called an insurgency, Amazon decided to take Parler off its Amazon Web Services (AWS), in essence shutting down Parler's entire business.

Even though there might have been good reasons for Amazon to do that, like Parler failing to prevent calls for violence, this was among the first times when the true power of cloud platforms became hard to miss. Imagine that by some twisted turn of fate, Google decided to deplatform Facebook.

Even though unlikely, any such attempt would make unaccountable cloud providers arbiters of free speech. This would make it difficult to uphold the democratic values that the Western world is based on. 

If Amazon or any other major cloud provider were a Chinese company, this would be all over the news,

Laurent Gil.

If cloud providers make the rules themselves, they force anyone who is using their services to be compliant with these rules, whatever they might be. Of course, one might argue that businesses are free to choose which cloud service they use but that’s merely an illusion.

Around 60% of the cloud market share is split between Google, Amazon, and Microsoft. For a good reason, as three tech giants invested billions in climbing on top of the market. However, according to Laurent Gil, co-founder of cloud optimization platform CAST AI, it's high time people understood the impact cloud service providers have over our lives.

"If Amazon or any other major cloud provider were a Chinese company, this would be all over the news," Gil told CyberNews.

Enter: cloud neutrality. Like net neutrality, the concept of neutral cloud service argues for freedom of choice and fair regulation meant to calm down businesses feeling the cloud-high sword of Damocles hanging over their heads.

We've sat down with Gil to discuss why cloud neutrality is essential and whether it's possible to convince the big three to take any action. According to Laurent, it's wise to act while it doesn't seem feasible that any cloud provider would abuse its power.

Firstly, let me ask you should people care about cloud neutrality? At first glance, it looks like a niche thing with little importance outside the business world. What are the main issues here?

I call it cloud neutrality because it reminds me of the debates on internet neutrality. At the time, it was deemed that an internet service provider (ISP) should never prevent users from accessing any websites or applications. They should never slow down traffic. This similar to cloud neutrality since the cloud is at the very core of our internet infrastructure today. 

The debate started when we heard about Amazon having the power to shut down any company, basically. Not that they will do it often, but the fact that Amazon can is very scary. If Amazon or any other major cloud provider were a Chinese company, this would be all over the news.

There was a similar case, albeit over a very controversial subject, when the Parler app was deplatformed.  The point is not whether you agree and disagree with this as a citizen. As an executive, I started to realize the risk at that time. I thought, wait a minute, we run a business that reduces the cost of the cloud for our customers. What if Amazon does not like that? And why does this company have a right to do it? There are only three major cloud service providers: Amazon, Google, and Azure. These guys are so dominant, that their activity reminds one of a monopoly. If you look at their pricing, you’ll see that these cloud companies have little regard as to how their competitors price similar services. This tells you a lot about the competition on this market.

There's zero competition because moving from one cloud provider to another is challenging. This scenario is the opposite of cloud neutrality.

Laurent Gil.

There's zero competition because moving from one cloud provider to another is challenging. This scenario is the opposite of cloud neutrality. And we face three giant companies that did everything in their power to ensure that the code in the cloud is not neutral, meaning you cannot move from one service provider to another easily. And while the ability to shut down any company is scary, the first consequence is the cost side of things. There is no competition. 

Monopolies are not exactly famous for easily giving up their market share for whatever reason. How do you see this changing?

The underlying thing is how do you make a hard resource like compute a commodity? It's a hard resource, and it powers the internet. Compute is machines, CPUs, memory, servers, and the services that go on top of them. 

History shows that every time a hard resource becomes a commodity, an economic miracle happens. The car was a luxury before Ford came up. A small number of people used automobiles even though the need for it was enormous. For me, it's the same with compute: the need is massive, but you have don’t have a broad range of options to choose from.

Thank God, we're not the only ones thinking about it. Kubernetes created by Google was designed in a way that allows moving applications from place to place. Suppose you move the application from place to place depending where running it is cheapest. In that case, you're effectively making compute a commodity - you have an application that can move around. 

The thing is, enterprises don't really mind which service they use, as long as it runs inexpensively and it's secure. This way, you're breaking the oligopoly of the top cloud providers because now you tell Amazon, Google, or Azure, that you were spending too much. And most importantly, if you don't like the price, you can switch to another provider. 

If you have something that moves automatically and effectively, the market forces will create a cloud ecosystem based on that. That's not the only reason for cloud neutrality, but it's one of its nice consequences.

It doesn't seem likely that large companies would voluntarily take part in such a transition. Do you think it's even possible without additional market regulation for cloud providers?

There's a lot of talk about this regulation. The discussion revolves around whether we should make sure that they cannot shut down an application because they don't like it. Perhaps to level the playing field, we should regulate providers instead of having providers decide by themselves.  

Maybe an independent institution should decide who has the right to shut down an application and under what conditions that may happen. I think that should be the minimum, where at least from a business perspective you have peace of mind knowing they cannot shut you down because they don't like you.  

Mind you, none of those companies are evil. Amazon's decision on Parler had good reasons behind it, and its justification was transparent. But that's not the point. The fact is that you're granting this power to corporations that have no regulation to limit or support them. 

What if a new type of cloud market leader that is not as transparent emerges? There's no regulation that can stop them. That's why some people think we need to regulate this.

In a way, it seems that it would be a lot easier to get the attention of major regulatory bodies if the issue would touch on people, not businesses.

I agree. The Internet neutrality debate was a consumer debate. The debate about cloud neutrality and the Trinity is a debate between corporations and developers. However, it touches on a lot of what we do in our life. 

Another thing is that some corporations understand the risks and choose not to go to Amazon, for example. Any supermarket, any grocery store that's competing against the main business of Amazon is very reluctant to purchase hosting services from AWS. And they're hesitant because they know that the company can shut them down, even if it would probably never happen. 

What if a new type of could market leader that is not as transparent emerges? There's no regulation that can stop them.

Laurent Gil.

But if you don't go to Amazon, you will just make Azure or Google bigger. And then you still have your top three players. Again they're not bad people, and there's no conspiracy here. 

But it's in their interest to be where they are because they know they can increase prices freely. They know that they will never see a customer leaving because it's almost impossible. 

Hybrid cloud is sometimes lauded as a way to mitigate specific risks that come from market concentration. Do you think hybrid could help cloud neutrality?

Not really. I think the hybrid cloud is viable only to large businesses since, in some cases, it's cheaper to run things in your own data center. Dropbox is an example. They saved a tremendous amount of money by moving back to the data center. But they are such a huge company that they can achieve economy of scale by running their own machines in their own facility. 

It's probably a bad idea to do the same for a small startup or a medium company because you don't have the economy of scale. Only large public companies may have economies of scale because they are so big that, effectively, the cloud means you have to pay the margin of Amazon. There are some good reasons to go hybrid. One is to continue to use what you spent on tech already. There are some good reasons to go hybrid. One is to continue to use what you have already spent on your own datacenter. The other reason is a repatriation because of cost: in some cases, compute cost on-premise can be lower than on the cloud. I'm not entirely convinced about this because I think if you want to optimize for costs, there are so many ways you can do it on the cloud before considering you have to think of moving back to on-prem. 

I often hear that a hybrid cloud is sound due to security reasons. But in my opinion, it's an illusion. People think that they're more secure because they own the machine. But Amazon has enormous security teams that have expertise at scale. They have everything money can buy. I think the security reason for hybrid cloud is probably an illusion, even though some CIOs may sleep better at night.

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