From Market Leaders to Monopolies – How Centralization lead to Cloudflation

From Market Leaders to Monopolies – How Centralization lead to Cloudflation

You might have heard the news – OFCOM is launching an investigation into the monopolization of the Cloud industry, of which 81% of UK revenue is currently being taken by “The Big 3”: Google, Microsoft, and Amazon.

This marks a turning point for the Cloud industry and a unique opportunity for new technologies entering the market in the form of decentralization and Web3.

So what exactly is going to change, and why does it desperately need to?

It’s clear that any actions of monopolization of the global ownership of data are completely and undeniably unethical. The OFCOM investigation looks to focus on “hyperscalers” in particular; a term that refers to a new cloud architecture of scalable computing, whereby data centers can allocate hardware and facilities accordingly, depending on the workload and server availability.

This form of computing is quickly growing in popularity due to its scalability and improvements in latency – and The Big 3 are jumping at the chance to put themselves in a position of market leadership.

They are leading the market, but in doing so, they are limiting progress; the OFCOM investigation is looking at their practices in creating barriers to competition whilst failing to fulfill their security promises.

In addition to possible ethical and security concerns, there are further trepidations that are beginning to arise within the cloud market itself. Hyperscale computing is supposed to be cost-effective, and usually, especially within tech, we can see prices go down as time goes on.

However, this year the opposite seems to be occurring with the hyperscalers, no matter what the service, whether storage or computing. It’s being dubbed “Cloudflation”, and while global factors such as the Ukrainian invasion certainly come into play, there are other deeper underlying causes.

While supply chain price increases account for some of the discomfort, one of the biggest pain points seems to be due to a lack of pricing transparency; 53% of businesses now report that they are unable to gain true visibility into cloud usage and costs.

The Big 3 have enough profit margin to undercut their competition – but they’re not – they seem to be riding the wave that their monopolization has offered them.

This possible monopolization just seems to be another symptom of the underlying effect of centralization.

How can smaller cloud companies possibly compete with the hyperscaler giants who already own 67% of cloud infrastructure combined? How can those smaller companies possibly provide the potential scale that the Big 3 inherently have?

The answer is that they must decentralize the infrastructure, and let the consumers bid for a fair price or opt for the solutions that suits them – in other words, they must put the power back into the hands of the buyer.

The Big 3 are still Web2 companies; to compete within Web2 space would require billions of dollars of investment – ​​however new players in Web3 are disrupting the cloud and bringing new possibilities for a fraction of the price.

Indeed, through decentralisation, smaller players such as the European IaaS start-up, NexGen Cloud, actually have far more compute/storage potential than their centralized predecessors – including the Big 3 – as they share compute capacity.

To put this into perspective, NexGen Cloud has a storage potential of around 18EiB through its decentralized offering; The Big 3, who have invested billions of dollars into their infrastructure, collectively only reached approximately 13EiB in mid-2012.

The Big 3 do not offer any liability or guarantee that your data will come back the same as you left it, either – another shortcoming of Web2 and centralization. This risk is completely mitigated with companies like NexGen Cloud, which offer immutability as a de facto through their decentralized framework.

Even if/when OFCOM places more stringent regulations on the Web2 hyperscaler monopoly, the cogs are already in place to supersede them; what OFCOM is doing is merely alerting end-users to the fact that their data is not quite as safe as they may have thought.

The truth is, that this has been a burgeoning problem for some time now, and now that the underlying issues are rising to the surface, disruptors like NexGen Cloud are poised to shape the next phase of the digital era.

Whether you’re looking from the point of view of an end-user or a solutions provider, it is becoming clear that the future of data lies within Web3 and decentralized frameworks.

The market is opening up, and anti-monopolization regulations will only fuel this advancement. Web3 companies like NexGen Cloud are ready to help the world finally take back ownership and control of its data.

The world is on the brink of a fundamental change in computing. NexGen Cloud is offering sophisticated investors the opportunity to be a part of this necessary evolution through a range of unique investment opportunities.

To find out more please contact investors@nexgencloud.com or visit www.nexgencloud.com for more information.

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