Like physical clouds, the services provided by the tech majors are completely opaque to the outside world.
Towards the end of July, Microsoft and the parent company of Google, Alphabet, presented their latest economic results relatively disappointing, blaming environmental macroeconomic difficulties. Yet both companies referred to the momentum of their cloud service, a key driver for future growth. The cloud was also responsible Amazoniaquarterly data better than expected.
The cloud includes computing services, including software, hardware and platforms, offered via the Internet instead of running locally on individual computers. By 2025, 45% of the world’s data storage will be in the cloud. While these services are used by all types of businesses and public sector organizations, cloud ownership is overwhelmingly dominated by Amazon, Microsoft, and Google. Together, them concentrated about 65% of cloud infrastructure services.
Even such a titan like Netflix recently said that they rely on Amazon Web Services (AWS) and cannot easily switch to another cloud service provider. Superwhich can only work via Google Maps, e Booking likewise they acknowledged their addiction to Big Tech. Major European companies have done the same in a Report 2021 to the European Commission.
Because the same lines of code can be used by many at the same time, the reproduction costs of selling artificial intelligence (AI) algorithms as cloud services tend to zero. So as Amazon, Microsoft and Google expand their customer base, profits increase exponentially: AWS is Amazon’s more 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 loaned out, the more they will learn and improve on their own, thus strengthening the digital leadership of the three giants.
The trend of market dominance based on privileged access to data is exacerbated by the code behind cloud services that are inaccessible to customers, becoming “stuck”. Clients know what certain services can be used for, but they can’t learn from the leased code since they can’t access the algorithms that make these things happen, even if those algorithms were partly developed by universities and other public research bodies.
This is true even when those customers are other large companies. Siemens, for example, is the European leader in terms of the number of AI patents it was granted. But Siemens is also addicted on the Big Tech cloud, including for the more advanced generic artificial intelligence needed to manage the more specific applications that Siemens integrates into its medical imaging, energy and transportation products.
Just one year after the launch of the company Siemens MindSpherea cloud platform for storing and analyzing data retrieved with the “internet of things” (IoT) from its sold equipment, AWS took over part of the development of this platform. It provides IT services that Siemens cannot develop internally but need to deliver AI-specific solutions to its customers.
Such technological addiction is risky for at least two reasons. First, Google, Amazon and Microsoft have already entered Siemens’ medical business, with the potential to become serious rivals.
Second, unlike the first wave of information and communication technology, where users could learn by using and adapting technologies, leading to complementary innovations, cloud computing offers technology as a black box. It limits user learning and creates long-term technology addiction, with no visible way out.
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All this while the algorithms of the tech giants improve themselves by processing data collected by companies like Siemens, which further widens the technology gap between cloud service providers and other companies. As this dependency grows, Siemens may continue to scale back its development of MindSphere, relying instead on the services of Big Tech clouds.
Siemens is one of thousands of companies basing their digital transition on analytics, databases, and IoT delivered as cloud services by tech giants. Like the use of these platforms as a service speed away from reliance on others, leviathans will further encompass the Internet commons.
Appropriation of knowledge
Such economic power escapes regulatory frameworks. Even the Digital Markets Actprobably the most advanced digital policy globally, stay focused on the markets: the concern is only with the tech giants as potential guardians of the market.
The term “cloud” appears only 14 times in the 193-page draft public version of this legislation. Not a word is said about how Amazon, Microsoft and Google manage this aspect of their business, expanding their knowledge appropriation by subordinating other organizations: they are not only the market but also keepers of knowledge and information. If the European Union and other regions of the world are serious about introducing legislation that can counterbalance their power, this wider scrutiny must be prevented.
The European Commission should pursue two fronts. Algorithms trained with data collected in Europe and based on collaborations with European universities and other research organizations should be made public. At the same time, the EU should devote funding and research to build a true public cloud.
Being at the frontier of knowledge as a cloud service provider will certainly be a major challenge and it is likely that Europe will never catch up. Yet if there is one region lagging behind in the digital economy that has the scientific and technological basis to make the attempt, it is Europe.
Does the EU have the political courage to do this? This is a different discussion.
Cecilia Rikap is Lecturer in International Political Economy (IPE) at City University of London, Researcher at CONICET, the Argentinean research council, and Research Associate at the COSTECH laboratory, Compiègn University of TechnologyAnd. She is the author of Capitalism, Power, and Innovation: Discovering Intellectual Monopoly Capitalism (Routledge) and co-author of The Race for Digital Innovation: Conceptualizing the Emerging New World Order (Palgrave).