AWS claims its cloud faces competition from on-premises IT

46 pointsposted 8 hours ago
by laktak

75 Comments

berkes

7 hours ago

This reeks of spinning a story by AWS in the hopes to avoid measures from anti-monopoly authorities.

Off course a company will deny that they are a monopoly (or cartel etc). They'll keep pointing out their competition to these authorities. Ironically, the investor relations of such companies often point at the same data, to tell their investors how big their moat is and how insignificant their competion.

I'll believe this change is really happening when AMZN starts reporting decline in their AWS gross returns. Is this declining?

rapsey

6 hours ago

In what way is AWS a monopoly. They have a ton of competition in every aspect of their business.

berkes

24 minutes ago

The parent article literally says > In a summary of evidence given to UK watchdog, the Competition and Markets Authority (CMA), AWS denies that customers face any difficulty in switching from its platform.

This CMA was investigating amazon's possible monopoly on cloud. So, this whole thing started rolling exactly because authorities are asking the exact same questions as you "In what way is AWS a monopoly." and in doing so, see enough leads to at least ask for reports and AWS's reply.

rickydroll

3 hours ago

Look at market share and ease of switching cloud service providers. A rule of thumb is that if you own more than 50% and can dictate prices, you might be a monopoly.

berkes

29 minutes ago

The cost of switching is just too high. This is true for their "competion" too.

We can see this when researching the books as published to shareholders. When AWS was the "sole" player (first mover advantage) they had insane margins. Then competition stood up: GCP, Azure etc. And grew. Their margin has staid the same. And is roughly similar to that of GCP and Azure. Which means they either have secret gentlements agreement over pricing (highly illegal, not likely, the risk is just too high) or there's other mechanisms at play that allow them to keep dictating the price.

Cost of switching is very likely such a mechanism. They lure you "on board" then once you start feeling the pain of the high margins, there's simply no way you can move to a competitor with lower margins - either that competitor isn't one really (Digital Ocean, OVH, Linode) or these competitors aren't competing on your margin (GCP, Azure) and have similar margins.

labcomputer

32 minutes ago

> A rule of thumb is that if you own more than 50% and can dictate prices, you might be a monopoly.

I guess the UK has different laws, but here in the US it works like this:

* 50% and below means you are definitely not a monopoly unless there is some weird set of facts than SCOTUS couldn't imagine the last time they considered monopolies.

* At some threshold around 60-70% you might be a monopoly, but market share alone isn't enough to prove that.

* Around 90% you are presumed to be a monopoly unless you can provide some very good evidence why you are not.

rapsey

2 hours ago

They own 32%

squigz

an hour ago

Source, please?

StableAlkyne

6 hours ago

The FTC is actively engaging in a monopoly case against Amazon: the organization whose job it is to break up monopolies certainly believes them to be one

https://www.ftc.gov/news-events/news/press-releases/2023/09/...

Edit: Amazon, not AWS. Sorry for the confusion!

rapsey

6 hours ago

The description on that page is entirely about the Amazon store business not AWS.

StableAlkyne

6 hours ago

Oh hell, this is why posting after an overnighter is a bad idea

user

6 hours ago

[deleted]

user

6 hours ago

[deleted]

alephnerd

5 hours ago

Personally, I agree with you.

That said, the current argument is that because AWS is part of Amazon at large, it can gain undue advantage by being subsidized by other organizations in Amazon, and forgo profits in order to gain a controlling share in an industry.

This is basically Lina Khan's whole argument [0]

I personally don't subscribe to this argument as a major reason for AWS's dominance compared to Azure in the early 2010s was because of stronger execution (lots of training sessions, evangelization, some truly cutting edge architecture) and better product-market fit, but Hipster Anti-Trust assumes a bunch of smallish companies competing with each other can result in a similar outcome (hence why VCs like Thiel, Horowitz, and Andressen tended to support scholars affiliated to the New Brandeis Movement)

[0] - https://www.yalelawjournal.org/pdf/e.710.Khan.805_zuvfyyeh.p...

rapsey

5 hours ago

But you could say the exact same thing about Azure, GCP, Oracle cloud and others.

alephnerd

5 hours ago

Hence why I said I personally don't agree with the New Brandeis Movement argument, and is something that Amazon's lawyers will absolutely bring up.

Some of the more "fundamentalist" members of that movement want de facto single product companies, with little to no consolidation/M&A.

Hypothetically good if you assume small players can compete optimally, but in action this absolutely means significant inefficiencies, at least in the tech industry because all small players inevitabely try to become large players in order to optimize on margins via economies of scale.

ransom1538

5 hours ago

Lol. I hope this is sarcasm. They have zero competition and 100% lockins. I would say AWS is a national threat at this point.

rapsey

5 hours ago

Their market share is 32%? Both Google Cloud and Azure are very large.

ransom1538

an hour ago

No, AWS market share is 99%. Go to any conference regarding cloud ever. Vendors just laugh at GCP, what a joke. Azure mayyybe 2%.

robertlagrant

5 hours ago

> I'll believe this change is really happening when AMZN starts reporting decline in their AWS gross returns. Is this declining?

Declining revenues isn't the sign of not being a monopoly. How is AWS actually a monopoly?

berkes

18 minutes ago

The parent article is about the CMA researching whether AWS is a monopoly and the answer to that from AWS.

> Declining revenues isn't the sign of not being a monopoly.

Thats a definition thing, though. Monopoly can mean a lot, depending on which side you are defending.

In this case I meant that AWS had insane margins when they were the only player - first mover advantage etc. But those margins didn't decline when their "competition" started becoming serious. In fact, if you look at their shareholder reports, AWS, GCP, Azure etc all have similar margins now, and AWS's didn't decline.

This tells us not if there's a monopoly. But it does tell us that there's no competion on margin/price.

Bu, what I meant was that if "on prem is a true competitor to AWS" we'd see their gross profits decline, as people are moving off AWS. And if we don't see this happening, than it's not a true competitor.

red-iron-pine

4 hours ago

> How is AWS actually a monopoly?

Like, is Azure not a thing? GCP? Hetzner? DigitalOcean? etc.

fallingknife

6 hours ago

Having a moat has nothing to do with anti-trust. A platform like AWS is incredibly difficult to switch off of regardless of market share.

berkes

16 minutes ago

It does have overlap though.

The article is about an anti-trust body researching whether that moat is not too much of a monopoly:

> In a summary of evidence given to UK watchdog, the Competition and Markets Authority (CMA), AWS denies that customers face any difficulty in switching from its platform.

AmericanChopper

6 hours ago

Production workloads are incredibly difficult to move, regardless of location.

bananaquant

7 hours ago

That is fantastic news if true. AWS and two other major cloud providers have done everything in their power to make it painful for businesses to switch off of them. Case in point: egress data fees are something like 80x compared to what the cloud provider actually pays. You still have to pay them in full unless you decide to leave AWS completely.

andrewstuart

6 hours ago

Cloudflare R2 - zero egress fees.

IONOS Virtual Private Servers - $30/month - zero egress fees.

bgidley

6 hours ago

Try using Cloudflare R2 with zero egress and you'll rapidly discover there are lots of 'gotchas'... - Want to use a cloudflare managed domain - pay for egress if you have enterprise account - Want to use their 'dev' domain - rate limited

It's still a good service - but zero egress comes with conditions. The only exception I've found is Cloudflare pages which seems genuinely zero egress (as long as you don't proxy it through a managed domain).

matthewcford

5 hours ago

I am curious why proxying it through a managed domain incurs additional costs.

andrewstuart

5 hours ago

I don’t need those things.

Sure it made me pay$5/month after some number of requests.

I don’t expect to pay nothing.

I just think 9 cents per GB for egress is robbery.

fallingknife

6 hours ago

Those fees are egregious, but they don't make it any harder to switch off AWS. The cost of the monumental amount of engineering time such a task takes is a couple orders of magnitude greater than the cost of the data egress. It's almost to the point where you wouldn't even bother to factor into a cost calculation.

bananaquant

6 hours ago

That doesn't really make sense. AWS is very profitable [1]. That means that whatever the amount of money they put into engineering, their customers pay, and then some.

As for the customers, very few of them operate at a scale that requires the monumental amount of engineering required to replicate the whole of AWS with its many dozens of services.

[1] https://www.seattletimes.com/business/amazon/amazon-reports-...

Sayrus

6 hours ago

Setting up a database, backup processes, object storage, archiving, and especially compliance is a huge upfront cost for a small company.

It is true that you pay for the engineering done by AWS, but you also need to take into account the network effect and compatibility with third-parties.

With this being said, AWS is still very expensive. But AWS being profitable doesn't imply it is profitable for you to run your own infrastructure. The same way it is not profitable for you to run your own shipping company, or your own internet backbone provider.

bananaquant

5 hours ago

Indeed, that is decided on a case-by-case basis. So if a company determines that moving on-premise is cheaper than AWS, perhaps that is actually true for them.

the_duke

6 hours ago

That entirely depends on how you build your stack.

I always strongly push for setting up the whole infrastructure with a future migration in mind, and without tying the company closely to specific cloud services.

You lose out on some of the better cloud features, but it's worth it in cash alone: being able to say "we have built our stack to be platform agnostic, we can switch within a month" is very useful in discussions with sales...

MyFedora

6 hours ago

AWS claiming that on-prem solutions are competition to UK regulators is like Apple insisting the App Store isn't a monopoly to EU regulators, Google asserting that Chrome isn't dominating the web to the DoJ, or Microsoft denying its omnipresence over the workplace. It's laughable. Seriously, did anyone here actually bother to read beyond the headline?

bananaquant

6 hours ago

Those are indeed similar situations, but your examples except the first one do not come from the article. So it is not clear why do you assume that everyone did not read beyond the headline.

grogers

an hour ago

To be honest, whole foods and the go stores could be (at least in some small part) a way to shift their competition base from "online retail" to "all retail" for anti-trust purposes. I wonder if AWS outposts melding cloud to on-prem fulfill enough to be a similar premise of widening the span of competition.

jcims

4 hours ago

They are not wrong.

I’ve been in jobs with cloud platform responsibilities at large financials for the last nine years. With all of the regulatory oversight and internal controls, the all-in price for cloud is actually quite high and usually gives businesses pause when they start to realize that.

Operating data centers is also incredibly expensive. The biggest costs come when you need to build new ones while maintaining what you have. The last place that I worked we spent several billion dollars in data center builds over the course of five years. Cloud was seen as a way to reduce the demand, but it takes a long time to build and mature a delivery platform that can run at reasonable velocity and adapt to business demands.

Now regulators are really focused on concentration risks and are demanding multi-cloud architectures and are testing contingency plans in the event of massive failures on the part of service providers. This will in part drive a demand for reserve capacity in datacenters as well as build out of platform management capability that that can move workloads around without substantial incremental engineering work.

TrueDuality

3 hours ago

There is definitely a specific monetary threshold where the financial justification flips and its probably around about $1 million/year of cloud costs if you need two region equivalent. This isn't "build a data center" kind of money, this is "rent some controlled racks and hire staff". You'll have to eat a good chunk of that operational savings over the time window with a big upfront capital hardware purchase.

That being said, this reeks of making a anti-monopoly argument and seems wildly overstated.

nubinetwork

7 hours ago

I'm not sure I believe this... I haven't seen a sysadmin job around here for a couple years... (unless you count Montreal, but I'm not moving to Quebec...)

misja111

6 hours ago

It is happening. Companies start to be more and more aware of the high cloud costs. Cloud is nice to spin up a project and have some elasticity in the performance requirements. But once it's running more stable and predictable it tends to be cheaper to have it running on premise.

chomp

4 hours ago

Currently in the middle of an EKS to on-prem OKD migration for a large company. It’s definitely happening- on prem with negotiated power/connectivity contracts, datacenter space, and hardware is a fraction of the cost of AWS at a certain scale. DC space includes remote hands but we could even throw in a few DC tech full timers and still save a ton of money.

mcmcmc

6 hours ago

Plenty of MSP work though

7bit

7 hours ago

You have not seen one? I assume the problem is you, then.

notepad0x90

6 hours ago

The person you're replying to is responsible for what is posted on job boards/sites?

antimemetics

6 hours ago

I think the point they are making is there are plenty of jobs around for sys admin, but GP is not looking in the right places.

rtpg

5 hours ago

Oxide already showing up and eating AWS's lunch I see.

Seriously though, it does feel like above a certain company size you really do get into a position where, if you can hire the team to run it, on-prem just feels right. Especially if you're not even really in the "internet" business in the first place. Cloud is so costly!

joshstrange

2 hours ago

Every once in a while I go drool over the Oxide server racks but I doubt I could afford one (or if I could I doubt I'd want to spend that much, and that's before needing to colocate it).

123yawaworht456

5 hours ago

time to hire a bunch of cloud ~~shills~~ evangelists again to concern troll about the hurdles of setting up a basic bitch VPS, pretending that it takes a cadre of highly-paid professionals do accomplish such monumental tasks

kikimora

4 hours ago

I don’t think anyone thinks that VPS is hard. Contrary, it seems universally acknowledged that VPS are way cheaper than cloud. Still people buy cloud for other reasons, good or bad.

To me it is - Systems Manager: centralized access to servers with logging. - RDS: backups, replication, DMS, DB autoscaling with Aurora. - ECS: simpler k8s, autoscaling - CloudFormation, terraform, CDK and pulumi. - Lambda

IX-103

6 hours ago

Yes, just like restaurants compete against home cooked meals.

zerop

5 hours ago

AWS must provide ways to reduce the bill of customers.

From experience, if AWS can tell customers what computes/capacity is not fully utilised and can be shutdown, it will help. I am not sure if it does in some form.

Another thing would be customer definable cap on cost.

Another pain points - Need to keep a DR region active all the time, fearing Data center/AZ outage.

anshumankmr

5 hours ago

In Google you could make a kill switch that was however not real time. I feel something similar might be possible in AWS.

However, the not being realtime might be a deal breaker for many.

october8140

6 hours ago

Cloudflare is the best and only thing I want to use.

motoboi

7 hours ago

I suppose we had cloud long enough to allow for people that never had a datacenter think this is a good idea?

I managed a tier 2 datacenter for some 4 years. Fire risk alone still gives me anxiety.

“Cloud It’s more expensive stupid!” Yeah… you know what’s way more expensive? People.

People and processes you’ll have to manage to achieve SLAs like Amazon’s? Well, good look with that. If you manage to find the people please write a book about how you achieved the process.

Oh, and new services on top of that every time a new technology appears? With the SLA and the consistent quality?

And the hardware, the building, the never ending decay of physical things. The drives for gods sake. The never ending pursuing of storage space.

The enterprise premium for hardware, that you’ll pay to have the manufacturer saving your ass. And please don’t think your employees will let you touch the fancy open source or community versions of things. You’ll blink and you’ll be paying the premium (and thanking the vendor for the option), because the risk won’t let you sleep.

And the most amazing part: business in you heels demanding innovation, quality, uptime and… change.

Four years, 10 years ago and my palms just got sweat thinking about that.

Your company is lucky that someone is willing to receive money to do that for you. And luckier yet that this company can do that very well. So well in fact that is very easy to forget how well they do that.

bananaquant

6 hours ago

> People and processes you’ll have to manage to achieve SLAs like Amazon’s?

In reality, you can have almost any people and processes. The trick is to put your servers and data in more than one place. If you have uptime of just 99% for a server (~3 days off in a year) and have them in 2 unrelated places, you will get 99.99% uptime. 3 places will give you 6 9's. The only thing that has to be ensured by people and processes is graceful fallback.

Notice how I say uptime and not SLA. SLA just means that you will get a little bit of money back if uptime dips below the SLA level. Oh, and for EC2 it is just 99.95%. So, if you really care about your users, you will engineer your systems to stay up rather than hoping that a third-party provider's SLA will save you.

acdha

6 hours ago

That assumes the only causes of failure are environmental. I’ve definitely seen plenty of hardware failures but software failures are common, too, and keeping things synchronized is going to require more than “any people and processes” - that’s how you learn your backup has never been tested and database replication stopped working 3 days before the failure.

pantulis

5 hours ago

Not forgetting operational failures due to human mistakes when doing delicate stuff on complex environments, and setting up on-prem infra to work like a hyperscaler does... well, it's not easy.

acdha

5 hours ago

Yeah, if they’ve actually tried that approach well, I hope their luck holds but I wouldn’t bet on it.

bad416f1f5a2

5 hours ago

All those points OP raised as difficult - physical space, staffing, capex, etc. - and your response is “yeah, now do it twice”.

spwa4

5 hours ago

Well, dedicated servers (for which you can have private cage, or VISA compliance, or ...) are a markup of say 30% over base cost, which is still 1/5th the cost of AWS. And even Hetzner will just deliver Kubernetes clusters these days.

These avoid all of the costs you were talking about.

michaelt

5 hours ago

> In reality, you can have almost any people and processes.

You've never tried it, huh?

The reality is you will need some very specific processes.

You'll want a test environment, so you can make sure that proposed router reconfiguration actually does what it's supposed to do, and a process that says to use the test environment, and a process for keeping it in a consistent enough state that the tests are representative.

You'll want a process to make sure every production change can be reversed, and that an undo procedure has been figured out and tested before deployment. When that's impossible, you'll need careful review.

You'll want a process to make sure configuration changes are made in all three production data centres, avoiding the risk of a distracted employee leaving a change part-way rolled out.

But you can't roll out to all three sites at the same time, what if the change has some typo that breaks it? So you'll want a gradual process.

You'll want to monitor the load on the three systems, to make sure if one goes down that the other two have enough capacity to take over the workload. You'll have to keep monitoring this, to keep ahead of user growth.

Did I mention the user growth? Oh yeah we're expecting a surge in demand just before christmas. The extra servers we got last christmas have absorbed our user growth, so we'll need more. Of course it'll take time to get them racked and set up, and there will be a lead time on getting them delivered, and of course a back-and-forth sales process. So of course we'll have to kick off the server ordering process in August.

Of course, there's a chance of a partial failover. What if the web servers are still working in all data centres, but the SQL server in data centre B has failed, while the replicas in A and C are fine? If there's a software hiccup you'll need to figure out who to call - yet another process...

traceroute66

3 hours ago

Take off those rose-tinted cloud spectacles and put them in the nearest trash can @michaelt !

> You'll want a test environment

You need that in the cloud too...

> You'll want a process to make sure every production change can be reversed

You need that in the cloud too...

> You'll want a process to make sure configuration changes

You need that in the cloud too....

> you'll want a gradual process.

You need that in the cloud too...

> You'll want to monitor

You need to do that in the cloud too....

> user growth / surge in demand

The problem with the cloud is everyone thinks they need to design for Google-scale from day zero.

Sure the cloud providers don't mind, more money for them ...

> there's a chance of a partial failover.

Could, and does, happen in the cloud too....

rcxdude

5 hours ago

I've yet to see a cloud deployment that didn't have just as many people managing it as an actual datacenter. And those people were higher paid. None of the examples I have access to shows a cost saving from the effort.

(And it doesn't save you from downtime, either. Cloud just introduces a new set of risks. Also, Most companies don't actually need anywhere near the kind of infrastructure that AWS does).

dopylitty

4 hours ago

This is what people don't realize.

At a certain scale you need tons of people to operate a cloud environment, especially if you take advantage of all the features.

Sure for tiny players the devs can be forced to both write the business code and manage the infrastructure but at a certain scale that just doesn't work because everything becomes non-standard and the amount of time to manage it takes up all the time the devs should be spending on writing business related code.

So then you spin up an infrastructure team. And it won't just be one either because the person creating your VPC/network design won't have time to also be working on your backup design or your database design or your image pipeline or your CI/CD.

So at the end of the day you end up with all the same teams you had in managing your datacenter infrastructure (network, storage, OS) except now you're paying way more for the infrastructure itself and the people cost more because they are not just specialist in their area but have to be specialists in cloud platforms as well.

__alexs

6 hours ago

The thing about cloud is that it bundles in tons additional costs that while yes, they do provide a better product in measurable ways, also you might not actually want.

What if I want a cloud, but I only want two or three 9s of availability?

traceroute66

5 hours ago

> you’ll have to manage to achieve SLAs like Amazon’s?

Aaah yes, those AWS SLAs that ....

    - (a) Famously apply anywhere except US-EAST region which has a proven tendency to blow itself up on a scheduled basis
    - (b) Are more marketing fluff than reality.  A bit like the old Verizon leased-line 100% uptime SLA, nobody sensible who worked in IT believed it, but your boss was paying the Verizon-tax so that Verizon could afford to pay out some hard-dollars when (not if !) the SLA was inevitably breached.
I would also invite you to actually go read the AWS SLAs. The famous 11-9's S3 SLA for example[1] ? Barely worth the paper it is written on. The S3 SLA is silent on data integrity or any other data metric. It only covers you for 500's returned by the AWS S3 API, the "Error Rate":

     "Error Rate” means, for each request type to an Amazon S3 storage class: (i) the total number of internal server errors returned by Amazon S3 for such request type to the applicable Amazon S3 storage class as error status “InternalError” or “ServiceUnavailable” divided by (ii) the total number of requests for such request type during the applicable 5-minute interval of the monthly billing cycle. We will calculate the Error Rate for each AWS account as a percentage for each 5-minute interval in the monthly billing cycle.
Also, its got the world's best get-out clause, the SLA only applies if you actively use the service:

    "If you did not make any requests in a given 5-minute interval, that interval is assumed to have a 0% Error Rate."
So, yeah, give me a break about those "amazing" AWS SLAs. :)

Also what happens if AWS breach their over-confident SLAs ? Oh yeah, that's right, typical corporate style hand wringing, an apologetic sounding email written in corporate-speak and approved by legal, and that's that. Maybe a mea-culpa public blog post if you're lucky.

Also when you have your own datacentre, you don't have all the stupid nickle and diming of the cloud providers. The major cloud providers are particularly bad about it, all sorts of obscure "hidden" charges just waiting to bite you in the backside if you don't look carefully at the bottom half of their price sheets.

[1] https://aws.amazon.com/s3/sla/

kozikow

6 hours ago

What do you think about product by Google - Google Distributed Cloud Air-Gapped?

Although the name is "air gapped" - it does not have to be if client doesn't want air gapping. It's "buy commodity hardware from vendors HP, we will give you software and training to manage it".

Much leaner stack than whole GCP/AWS/Azure, but deployed "on-prem" with "cloud-like" experience.

flir

6 hours ago

> I suppose we had cloud long enough to allow for people that never had a datacenter think this is a good idea?

Centralization vs. Decentralization. And the pendulum swings on.

andrewstuart

5 hours ago

The next step after becoming very concerned about minimizing cloud costs is planning to leave.

sergiotapia

6 hours ago

Thiel said that monopolies like to pretend they have stiff competition, and paradoxically small companies pretend they have monopolies.

Which one do you think is true for amazon?

anothernewdude

6 hours ago

Hilarious. Didn't they just announce a return to the office? Now they're complaining?

cooloo

3 hours ago

One word bull-shit