A recent outage at Amazon’s cloud services division, AWS, has raised critical questions about the heavy reliance of various sectors on a limited number of tech giants. The issue became apparent when millions of users experienced disruptions in popular applications and services, such as Snapchat, Reddit, and Spotify, alongside challenges faced by delivery apps like DoorDash and Grubhub. The impact was widespread, affecting significant aspects of daily life, including financial transactions through Venmo and communications on platforms like Zoom and WhatsApp.
This incident echoes previous outages, notably the CrowdStrike disruption and the Rogers incident in 2022, highlighting a concerning trend within the digital economy. As the Atlantic’s Will Gottsegen aptly noted, a major failure at Amazon can lead to a systemic failure for numerous services and businesses.
Currently, AWS commands nearly one-third of the global cloud services market, with Microsoft Azure and Google Cloud following closely. Collectively, these three companies dominate over 60% of the market. This concentration of power invites scrutiny—how did these companies manage to establish such significant market shares?
Experts suggest several factors contribute to this phenomenon. While some companies achieve success through innovation and efficiency, others face allegations of anti-competitive behavior that helps maintain their dominance. For instance, a report from the UK’s antitrust regulator claims AWS’s market position is damaging competition, prompting a call for investigation. Although Amazon defended its standing by saying it reflects a competitive landscape, it has faced prior accusations in the U.S. regarding monopolistic practices related to its Prime service, culminating in a settlement involving a considerable financial penalty.
Market dynamics have changed, with a shift towards oligopoly or monopoly frameworks creating fragility in the economic landscape, according to Robin Shaban, co-founder of the Canadian Anti-Monopoly Project. Digital platforms often exhibit a “snowball effect,” becoming more valuable as more users join. Such characteristics, combined with potential “killer acquisitions” where larger firms buy out emerging rivals, contribute to the market dominance of a few players.
While a concentrated market can foster efficiency, it’s not without risks. Vass Bednar from the Canadian SHIELD Institute pointed out that the number of competitors in a market does not inherently define its health. Instead, robust markets depend on a variety of factors, including the nature of competition and barriers to market entry.
The recent AWS outage affected numerous Canadian firms, including wealth management platform Wealthsimple and the Toronto Blue Jays, which faced ticket purchasing disruptions. Legal expert Jennifer Quaid emphasizes the inevitability of such outages and stresses the need for systems to minimize their adverse effects. Certain industries require built-in redundancies to ensure reliability, but many sectors still lack these safeguards.
Following the Rogers outage, regulatory bodies have been working to implement changes aimed at improving resilience in critical infrastructure. In light of the AWS incident, experts suggest evaluating the importance of digital services and identifying areas where redundancies should be prioritized.
Despite the pressing need for greater resiliency in digital infrastructure, bedrock protections remain largely absent in Canada. Bednar notes that the vulnerabilities inherent in foreign-owned infrastructure have become more apparent, prompting calls to enhance investment in domestic digital infrastructures to ensure consumer safety and confidence.
