AWS has claimed to face competition from on-premises IT while defending the level of competition in the UK cloud market, according to a Competition and Markets Authority (CMA) hearing.
At the hearing, conducted as part of an ongoing investigation into the state of competition in the UK cloud industry, AWS refuted the perception that “once customers move to the cloud, they never return to on-premises,” claiming instead that the cloud giant “faces competition from on-premises IT.”
“AWS stated the market investigation's narrow focus on cloud services does not contextualize the role of those services within the IT services market,” the summary of the hearing said.
The hyperscaler provided examples of customers moving from the cloud back to on-premises systems, noting also that building a data center “requires significant effort” and so the fact that customers are doing so highlights the level of flexibility they have.
Reasons for making the move back to on-prem include the relocation of internal finances, the adjustment of technology access, and the increased ownership of resources, data, and security, AWS said.
In addition, AWS denied that the CMA’s evidence supports a “compelling theory of harm” on technical barriers, committed spend discounts, or egress fees, instead stating its opinion that the cloud market is fair.
“AWS told the CMA that it considers the competition between IT providers to be well-functioning and that cloud services meet the needs of customers both in the UK and globally in terms of pricing, innovation, product choice, variety, and quality,” the summary said.
The firm reportedly told the CMA that the evidence “demonstrates customers can multi-cloud, switch between cloud providers when they want to and negotiate contract terms effectively with their existing providers.”
AWS explained that some customers “may tend to predominantly” use a single cloud provider to cut down operational costs and maintain a level of ease in training.
“Generally customers will decide on a workload-by-workload basis which cloud provider to use,” it claimed.
Looking forward, AWS stated that it would be “very difficult to restrict remedies to geographic subsets of customers” given that cloud services are delivered in a global context.
People familiar with the matter told ITPro that AWS’s reference to on-prem providers constituted a minimal part of the hearing.
They added that statistics within the report suggest that 15% of workloads are hosted in the cloud, thereby the hyperscaler does face competition with on-prem providers as either an alternative or an addition to the cloud.
Critics question AWS claims
Other cloud providers have hit out at AWS over the claims made in this hearing, with Civo CEO Mark Boost telling ITPro that the hyperscaler is overselling the issue of cloud repatriation.
“AWS implies that it is facing major competition from enterprises moving applications back on-premise, despite the effort this data migration requires. They overstate the extent of this phenomenon,” Boost said.
He accepted it was true, however, that “a number of cloud customers” are moving back on-prem owing to dissatisfaction with the offerings from major cloud providers.
“In the face of this, on-prem and private cloud solutions are a stronger guarantor of data sovereignty,” Boost said.
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“AWS’ suggestion that the CMA widen its cloud investigation to cover the IT services market as a whole will not change this. Expanding the scope so broadly at this stage will only dilute the investigation’s effectiveness,” he added.
Boost insisted that the CMA should remain focused on investigating practices unique to the cloud, such as unfair cloud credit schemes, rather than cloud customers looking to retain control of their data.
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