Enclosing the internet—Big Tech’s cloud cover – Cecilia Rikap

Like physical clouds, the services provided by the technology majors are utterly opaque to the outside world.

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Big Tech companies accrue huge rents by monopolising cloud services provided at near-zero marginal cost (whiteMocca/shutterstock.com)

Towards the end of July, Microsoft and Google’s parent company, Alphabet, presented their latest, relatively-disappointing economic results, blaming the ambient macroeconomic distress. Yet both companies referred to the momentum of their cloud service, a critical engine for future growth. The cloud was also responsible for Amazon’s better-than-expected quarterly data.

The cloud comprises computing services, including software, hardware and platforms, offered via the internet instead of running locally on individual computers. By 2025, 45 per cent of the world’s data storage will be on the cloud. While these services are used by all sorts of companies and public-sector organisations, cloud ownership is overwhelmingly dominated by Amazon, Microsoft and Google. Together, they concentrate around 65 per cent of cloud-infrastructure services.

Even such a titan as Netflix recently said it relied on Amazon Web Services (AWS) and could not easily switch to another cloud provider. Uber, which can only operate via Google Maps, and Booking have similarly recognised their dependence on Big Tech. Leading European corporations did likewise in a 2021 report to the European Commission.

Exponential increase

Since the same lines of code can be simultaneously used by many, the reproduction costs of selling artificial-intelligence (AI) algorithms as cloud services tend to zero. Hence, as Amazon, Microsoft and Google expand their client base, profits increase exponentially: AWS is Amazon’s most profitable business. Furthermore, since the AI code rented as a service includes deep-learning algorithms, which learn as they process data, the more these algorithms are lent, the more they will learn and self-improve, thus reinforcing the three giants’ digital leadership.