On Thursday, the oversight of cloud service providers was tightened by the Federal Trade Commission.
FTC Chair Lina Khan highlighted software registration procedures, exit fees, and minimum-spend contracts as potential threats during the agency’s recent meeting. The discussion focused on the risks associated with AI words cloning and sought input on cloud competition.
Khan emphasized the reliance of businesses and U.S. authorities on cloud providers to support their services. With cloud computing’s increasing importance, three major cloud companies currently dominate the market.
In March, the FTC initiated an investigation into cloud competitors by requesting information on hyperscaler firm practices. Concerns at the agency have escalated with the rise of conceptual AI tools.
Cloud technology plays a crucial role in artificial intelligence advancements, according to Khan. Understanding the dynamics in this field is now more critical than ever.
Businesses are increasingly turning to cloud-based marketplaces to access conceptual AI tools due to the resource-intensive nature of large language models. This has led to close interconnections between solutions.
Nick Jones, a senior technology advisor at the FTC’s Office of Technology, highlighted the significant reliance of AI firms on cloud providers for developing their technologies.
Escalating Cloud Conflicts
Tensions between the top three cloud service providers intensified over the summer following the FTC’s investigation.
Google criticized Microsoft in July for imposing restrictions, limitations, and additional charges on customers attempting to switch workloads to Azure competitors in response to the FTC’s call for public comments.
AWS and Microsoft provided individual responses, portraying a more positive outlook on competition in the cloud industry. However, Microsoft was recently accused by Cloud Infrastructure Service Providers in Europe, a group including AWS, in a complaint to the European Commission’s Directorate-General for Competition.
According to Synergy Research Group, the three tech giants now collectively control two-thirds of the overall cloud market. AWS maintains its dominance, capturing approximately one-third of cloud spending, with Microsoft and Google following at 23% and 11%, respectively.
Growing Risks in Cloud Services
As businesses increasingly adopt cloud technologies and transfer more workloads, dependence on these technologies is expanding across various sectors, attracting the attention of risk managers.
Gartner’s recent report identified cloud risk as a top-five emerging business concern for the second consecutive quarter. Issues such as vendor lock-in, regulatory compliance challenges, and the expanding impact of potential breaches or outages are raising alarms among analysts.
Ran Xu from Gartner’s Legal Risk and Compliance Practice noted that cloud risk is transitioning from an emerging concern to a widely acknowledged threat for most companies. Many organizations are now vulnerable to significant disruptions if a single provider experiences a failure.
Khan highlighted the consolidation in the cloud market, raising concerns about competition and consumer protection. The FTC’s scrutiny extends to Big Tech, with investigations into companies like OpenAI, funded by Microsoft, focusing on data security practices.
Khan referenced previous actions against companies like Uber-owned Drizly, Chegg, and Global Tel*Link Corp, emphasizing the FTC’s commitment to enforcing data security practices in the cloud computing sector.
