Recently the top three cloud infrastructure providers significantly reduced the proportion of revenue they take from third-party software sales on their cloud marketplaces. Although this seems like a pro-competitive move, in reality, it is only strengthening the existing monopoly.
The cloud computing infrastructure market is highly concentrated. The top three providers, Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, account for over 60% of all cloud infrastructure sold.
As we’ve previously discussed, this can be problematic for several reasons. Obviously, this could limit consumer choice and lead to higher prices. Beyond this, it can leave computing buyers exposed to single-point-of-failure risk due to the inherently centralised nature of these providers. Considering the market’s enormous environmental and economic impact and that it’s projected to grow about five times by 2030, there is a lot at stake.
What’s the news?
Following similar recent moves from AWS and Microsoft Azure, Google Cloud slashed the percentage revenue share it takes from third-party software sales on its platform from 20% to 3%. For comparison, AWS’s and Azure’s fees are 5% and 3%, respectively.
On the surface, this move was interpreted as an attempt to increase competitiveness and attract more software sellers to the platform. Only time will reveal the impact of this decision, but meanwhile, there is something important worth observing. Google Cloud is yet to turn to profit and actually brought a $591 million (£436m) operating loss to its parent company Alphabet in Q1 2021.
So, it is reasonable to ask if this move is intended to boost competitiveness or if there is something else going on?
In practice, this move merely aligns Google Cloud with its key peers – AWS and Azure. The most likely outcome is that hardly anything will change in the industry.
These ‘competitive’ rates will likely attract even more suppliers of applications to these platforms. As a result, they’ll likely capture an even higher proportion of the market demand. Consequently, market concentration will increase, and inefficiencies in pricing and distribution will persist.
Perhaps more importantly, the old paradigm based on centralisation will assert itself.
We’ve explained before that decentralisation is key to breaking AWS and Microsoft’s cloud market monopoly. Not only that, but it is actually the only viable solution to the problem we currently have.
That’s why our Cudo Compute ecosystem provides you with access to decentralised cloud computing resources. It also includes Cudos, a blockchain that will connect developers and consumers to Cudo Compute for high-performance computing, removing the reliance on hyperscale providers and democratising the market.
Our Compute offering provides another option for extending hardware life by finding new workloads that contribute to a circular economy. Beyond this, we strive to move the focus of the blockchain climate discussion away from uninformed arguments against it toward its huge potential to help the world reduce wasted computing energy.
Moreover, we don’t merely live on the inspiration of our bold vision. We’ve committed ourselves to carbon-neutrality right now and have embedded it in our DNA.
How can you help?
Luckily, there are plenty of opportunities for you to make a difference by contributing to a fairer, more competitive, and more sustainable cloud market.
If you are a data centre and cloud service provider with global locations, we want you to contact us now!
If you are a Blockchain champion and want to promote its adoption, the best thing you can do is to join our incentivised testnet, Project Artemis.
Ultimately, with your help, we can create a cloud computing market that is not only efficient but also gentle on the environment and kind to our future generations.
The Cudos Network is a layer 1 blockchain and layer 2 computation and oracle network designed to ensure decentralised, permissionless access to high-performance computing at scale and enable scaling of computing resources to 100,000’s of nodes. Once bridged onto Ethereum, Algorand, Polkadot, and Cosmos, Cudos will enable scalable compute and Layer 2 Oracles on all of the bridged blockchains.
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