Joint report by the Internet Economy Foundation think-tank and business consultancy Roland Berger urges governments to take steps to prevent a cloud computing oligopoly that would leave organisations at greater risk of supplier lock-in
Public sector organisations should take a multicloud approach to sourcing IT services to mitigate the risks posed by the wider cloud computing market becoming monopolised by a handful of large, dominant suppliers.
The recommendation is one of a number put forward in a new 48-page report, co-authored by the Internet Economy Foundation (IE.F) think-tank and business consultancy Roland Berger, on what governments can do to encourage competition in the cloud computing market.
To this end, the document urges public sector organisations to adopt a multicloud strategy, and to create clauses in their IT procurement contracts that ensure users deploy services that are interoperable and enable workload portability across various platforms.
The report, Innovation and security through diversity, says this is important in order to protect end-user organisations from the risks associated with relying on a single IT supplier in a market that is increasingly dominated by a handful of large cloud infrastructure and platform operators.
“Monopolisation similar to what we have witnessed in the markets for operating systems, e-commerce and search engines is a real threat,” says the report.
“Yet, in the cloud sector, that would deal a fatal blow to market diversity and competition. Customers would have fewer offerings to choose from. Moreover, a lack of competition would stifle innovation and erode financial value.”
It would also put end-user organisations at greater risk of supplier lock-in, which they can mitigate by adopting a multicloud strategy. But governments also have a role to play, the report says, by creating market conditions that make it harder for monopolies to form.
As such, the report says the onus should be on governments to take a proactive approach to prevent an oligopoly forming, comprising the major players that currently dominate the cloud computing landscape – Microsoft, Amazon and Google.
This work should take place at both a policy and legislative level, it adds, with governments taking steps to enforce rules around how public sector organisations should approach cloud procurement.
“The public sector is itself a major customer for cloud computing services,” says the report. “In this capacity, public administrations [governments] must support a balanced cloud portfolio as part of a multicloud strategy. In other words, they should source the most suitable cloud solution for each individual task area.
“Multicloud strategies thus sharpen competition between different cloud computing players and help prevent individual companies from dominating the market.”
From a legislative point of view, the report advises governments to consider rolling out pan-European standards that would remove the geographic barriers that may prevent smaller cloud players from establishing a pan-European customer base.
“Uniform security standards would enable smaller cloud computing providers, in particular, to sell their products across borders throughout Europe,” it says.
“Introducing common industry standards in cloud computing would also make it easier for customers to combine the services of different providers or to ‘take their data with them’ when switching providers.”
Clark Parsons, managing director of the IE.F, said such measures are essential to safeguard the competitiveness of the cloud computing market, but he stressed that government intervention is needed now.