Ofcom proposes to refer UK cloud market for investigation
ofcom.org.uk
ofcom.org.uk
GCP can follow in a few years, if they survive that long.
Just my assumption however
To be fair to Google, they have a lot less experience with managing Wall Street through tactical use of accounting standards.
If they can tease identity out, the rest gets easier.
If you drank to cloud kool-aid from the beginning you kind of get used to huge costs for simple services so it's easier for your brain to justify paying 10k a month for a simple web app deployed in kubernetes, using cosmos db and any other number of services.
I've seen many companies that started on the cloud and their core architecture is so interleaved with the cloud that it would a huge investment to reduce that dependency and switch.
I see this spouted a lot, but my recent (last 6 months?) experience with AWS is that unless I pay up front to reserve a tonne of high end instances that I don’t necessarily need today, but might need tomorrow, I’m regularly running into capacity issues where I cannot spin up new instances of the metal that I want, and AWS support confirms they just don’t have the capacity unless we pay to reserve it up front.
At that point, it’s no different to running my own DC, where I already have 3 months of runway on my server pipeline anyway.
The risk of doing the same with high end instances is a different story.
Low risk & high margin products make for a highly profitable business. High risk and lower margin products less so.
Their target audience is people that can be equally well served by digital ocean and their ilk, but are happy to pay the Amazon premium.
It’s a good business model for Amazon, and a terrible value proposition for the customer who may not know better, and thinks they’re paying to de-risk their potential future growth requirements. The cost of migrating out then becomes prohibitive (both in technical hours and egress fees), so you like it or lump it, but either way, you likely just wait and/or pay Amazon more.
Until you can’t.
The magic if there is 1 is not the scale but the free credits. Startups can go years without paying and then it's all too late.
Scale is meaningless when it costs 10x more. Just have spare capacity and lots of it.
Here is an experiment - tell your employer you will be hosting on (insert no-name provider here), to same a literal million dollars, and see if you can get security team to sign off on it.
Here is another experiment - reach out to he security team, and tell them AWS costs are too high, ask them which providers they will be ready and willing to sign off. My guess is it will not be a big list beyond AWS/Azure/GCP.
So the market is not competitive at all, most of us cannot switch providers even if the alternative would be 100x better.
PS: I am not saying security team are assholes, I am pointing out a major barrier to competition.
https://www.datacenterdynamics.com/en/news/datacentred-is-sh...
tl;dr even after getting a big public sector contract, a UK based cloud provider was killed off after scaling to meet demand which was then withdrawn. Attaining - and keeping - scale is extremely difficult. And that was just IaaS provision.
Anyways, big corps aren't the only player. There's plenty of SMEs that don't care the slightest about using only the big clouds.
> Here is an experiment - tell your employer you will be hosting on (insert no-name provider here), to same a literal million dollars, and see if you can get security team to sign off on it.
???
So what does this have to do with the security team at all? There is no "barrier" in that sense.
In the past we've had more non-cloud engineers than cloud. Using your experiment, if you told your IT team you wanted to move to the cloud (back then) to save a million dollars - do you think they'd sign off on it? No.
Who signed off on it? The bosses that believed in the "hype".
Who's in control and who has power? If the bosses want it to happen it will even if it doesn't make sense. They have the ability to fire the security team if they said no. Just like how ethical AI teams get fired...
The barrier is those in power still believe in the "hype" and don't know otherwise.
I met a CTO of a startup sometime ago that moved their entire operations from GCP to AWS because they were "more familiar with it". That's all.
Without knowing which startup you are referring to its hard to make a judgement as to the quality of the decision but you should not discount the role tooling familiarity has when developing software.
No 1 was familiar with the cloud when it 1st came out.
As to this scenario, clearly the whole company was running GCP so everyone minus the new CTO would be familiar with GCP vs something else.
Point exactly being that regardless of the security team or the developers - this familiarity that you mention or any other trait only applies to a select few in management.
SOCS/PCI/etc is going to take maybe $100-200k. If you can save a million dollars you should do it. Hire an expert if you have to. Serious.
I think it probably won't save you a million dollars, because I think all of the cloud vendors are priced with just enough profit to make sure of it, but if you know something I'd like to know about it.
I’m assuming you already adhere to the relevant standards. Obviously if you’re cutting corners getting up to snuff is going to cost a lot more than a hundy.
Profit margins on cloud computing are insanely high (at least, relative to my expectations). They basically have no interest in anything with less than a 15% margin, even at the massive scale they operate at. Certain products have triple-digit margins. Even if they are the minority, I don't think we can give them a pass with claims of "just enough profit".
This is the old unpopular Hayek/Friedman “classic liberal” position, that markets and industry should be heavily regulated and taxed.
In socialism/communism all sectors become state monopolies, with no market incentive to provide a decent service, nor to compensate workers fairly.
Unless you are talking about the theoretical "pure communism" which is fiction/fancy and we may as well be talking about utopia.
It makes sense with this being an American site, and most Americans think that Socialism is essentially the same thing as Communism (but then why define them as separate things?).
Community, Cooperative, Employee owned are all forms of socialism. None of them prevent competition.
> no market incentive to provide a decent service, nor to compensate workers fairly.
If you owned part of the company you worked for, you would be more likely to provide good service as that would then have repeat business and would directly financially impact you. The performance of the business is the only way you would get paid and as there are no shareholders the company would compensate rather than dividend.
Your comment makes absolutely no sense, socialism doesn't prevent free markets.
"Community, Cooperative, Employee owned" are all concepts that can (and do) exist under a capitalist regime.
Socialism is very different, and it does prevent free markets.
This is fundamentally wrong.
You should probably read about it before making statements that make you look foolish.
https://en.m.wikipedia.org/wiki/Socialism
Socialism is about social not state ownership of the means of production. This does not prevent the state being involved either, and even then they can be a joint-stock corporation's.
A socialist regime, like the USSR, North Korea, or Mao's China would have state ownership. The founding fathers of modern socialist thought (e.g. Marx) would define socialism in terms of state ownership of the means of production.
But feel free to muddy the waters if you prefer to avoid concrete definitions.
I think people are confused thinking free market means no regulation. No regulation leads to monopoly which is the furthest from a free market you can possibly get. People who seriously advocate for such things are ignorant fools. There are countless examples of how markets fail and that's why every major economy in the world has a government.
The one into online advertising also went nowhere: https://www.gov.uk/cma-cases/online-platforms-and-digital-ad...
I don't hold out much hope.
- Slighty modified open source infrastructure applications (PostgreSQL, etc.)
- Access management
- Brand
- Fancy deployment scripting (needed when > 15 VMs)
- egress cost (as mentioned in the article)
If you do not any of the above, you can roll out your own Redis and PSQL, or use a third party provider, Hetzner is often much better deal.
They're not comparable to AWS but it has reduced choice and IMO customer support, as each individual company is cost-optimised into a brand and the actual hosting moved to the parent company's infrastructure.
I'm not sure what they mean by this, anyone care to speculate?
They merely say that after doing a market study, they noticed that: egress fees are significant, technical barriers to interoperability are in place and the discount structure based on committed spending is suspicious. From their point of view, that warrants an actual full investigation by the Competition and Markets Authority.
That's probably not a great example of vendor lock-in.
For example, they whack your self-hosted or other-vendor-in-AWS options with cross-AZ bandwidth charges that they exempt you from when using RDS.
Nothing insane about that.
Also, this is excellent and way past time. I'd love to see some movement here that would allow some competitors into the market that would be more wholesome than the usual field of american monsters.
In addition to established giants such as AWS, Azure, and GCP, there are also healthy second-tier players such as Cloudflare, Akamai, and Digital Ocean. I can also list more than a dozen new startups in the space that got money thrown at them.
Furthermore, it's important to recognise that cloud companies struggle to lock in because of the competitive dynamics at play. You have 2 levers to pull, money and tech lock-in.
You can't go far with money without quickly reaching diminishing returns. At the core you have compute, databases and object storage. All off these have been abstracted to a point where its very tricky to create lock-in without creating strong adverse reactions from customers.
As someone who has been closely observing the industry for almost a decade, I have noticed a strong trend towards reduced lock-in.
> High fees for transferring data out, committed spend discounts and technical restrictions are making it difficult for business customers to switch cloud provider or use multiple providers
The technical restrictions are, as you say, not clearly creating lock-in. The committed spend discounts seem like a gray area. But the egress fees are no joke, and I consider them extremely anti-competitive.
How would you propose PAYG/SaaS bandwidth pricing is altered to be more competitive, or for example Amazon Glacier retrieval is heinously expensive for retrieval but it's transparent and IMO has a fair reflection of the underlying costs involved.
But I will argue with egress. AWS and its friends charge absolutely outrageous amounts for egress:
https://blog.cloudflare.com/aws-egregious-egress/
And the fact that they have made no move to reduce pricing to compete with R2 suggests that they are not actually motivated by making a profit on egress. I strongly suspect that they are motivated by lock-in: AWS wants you to minimize egress costs my moving more services into AWS. And this includes third-party services. In a competitive market, services like Crunchy Data, Pinecone, and Snowflake would ordinarily be hosted in their own datacenters or in colocation facilities, and customers would pay a hefty premium to use an AWS, Google or Azure version. But, since egress fees mean that a non-big-cloud variant can’t possibly be cost-effective for customers, these services don’t bother to offer. (And they can’t even be usefully competitive across clouds. If Azure wants to attract companies like Snowflake, reducing the amount they charge for storage and compute is entirely useless.)
I don’t know how to regulate this properly, but a price cap at some low (and ever-falling) figure wouldn’t be so horrible. Or requiring that egress be billed at the same rate as local traffic. (Although 100Gbps of same-rack traffic is cheap, whereas 100Gbps of egress is genuinely fairly expensive.)
As an aside: having recently priced Glacier vs commodity hardware, Glacier is reasonably priced for monthly storage but not particularly cheap. I suspect it exists in part to make customers feel better about moving large amounts of data into the cloud. AWS could likely still make a profit on it if the retrieval fee were decreased by a factor of 10. If I wanted to store a few hundred TB and access it a couple times a year, especially if that access is from outside AWS, then storing an on-prem copy is less expensive, and the best option may be an on-prem copy plus an archive in Glacier for disaster recovery.
i.e. If a company builds a lot of their infrastructure on Azure Cosmos can they easily move across to a smaller cloud provider?
Only a small group of cloud customers would find this "burden" meaningful enough in monetary terms to even generate a report. In my view, this does not rise to the level of severity, scale, or type that would warrant regulatory intervention.
I believe the difference of opinion is political in nature, I'm fundamentally opposed to the government taking a kingmaker/referee role in the free market.
This is why I abhor the three letter agencies in America, especially the financial ones. These regulators especially in Europe are given immense power to arbitrarily decide whats right/wrong.
The EU alternatives are notably inferior, they constantly find themselves playing catch-up, which could be attributed to a weaker anti-tech ecosystem.
The tech giants in America are able to innovate at a rapid pace due to a robust ecosystem that encourages experimentation and dogfooding. Google, for example, developed MapReduce and Kubernetes out of necessity, while Amazon and Microsoft also heavily rely on their in-house innovations.
You can make a similar argument with Cloudflare and Akamai, these offerings were not only welcomed, they needed to exist in the American tech ecosystem.
You see similar ecosystem dynamics at play in China with hardware.
...could be read as the "UK is in Europe." It's not, of course. Ofcom means nothing to us over here. Though I'm sure it'll be watched, and learned from.
Eg. an AWS VM reading data from DynamoDB should cost the same per gigabyte than an AWS VM reading data from Google Bigtable.
Either they need to start accounting for bandwidth between services, or stop charging for bandwidth to competitors.
Yet bandwidth to a competitor 200 miles away is far more constrained. As well as costing more, it simply isn't practical to have a fleet of 10,000 VM's all booting up using remote disks 200 miles away in a competitors datacenter which only has two 100Gbps direct network links shared between all customers.
Non interoperable services would have a 25% revenue tax applied if they have more than a 10% market share and are run by a company with a revenue over $10M/yr.