Amazon Web Services’ evidence to the UK’s Competition and Markets Authority is something of an about turn
The UK’s Competition and Markets Authority (CMA) has published an update to Phase 2 of its investigation into the cloud services market. This includes a summary of its hearing withAmazon Web Services (AWS) which took place in July. The publication of the CMA’s final decision is scheduled for between February and April 2025
AWS told the CMA that it is facing stiff competition from on-premises infrastructure. As The Register points out, this is an unexpected switch of positions given its previous contention that one day all workloads would move to the cloud.
AWS also said its customers have no difficulty switching away from its platform and listed some of customers who it says have done so, returning to on-prem IT.
Why go back to on-prem?
According to the CMA’s summary of AWS’ surprising contribution, “building a datacenter requires significant effort, so the fact that customers are doing it highlights the level of flexibility that they have and the attractiveness of moving back to on-premises.”
After years of tub thumping about the benefits of public cloud this is surprising. And AWS added that customers return to on-prem for various reasons, including “to reallocate their own internal finances, adjust their access to technology and increase the ownership of their resources, data and security.”
The Register notes that cost is also factor and points to the infamous case of 37Signals in 2022, whose product is Basecamp, which opted for on-prem after being whacked with a bill a $3.2 million bill for cloud hosting bill. The Register reported in February 2023 that 37Signals reckoned it would save $7 million by spending $600,000 on servers. By the end of last year, the company claimed it had already made savings of $1 million.
Stratagem to avoid remedies?
Anyway, back to AWS and the CMA – The Register wonders whether its new stance is a stratagem to avoid anti-trust remedies? It asked AWS how many companies had left it to go on-prem. AWS replied that in total 29% of all UK organisations have moved away from cloud providers for on-prem but no actual numbers were given.
Andrew Buss, IDC Senior Research Director for EMEA, told The Register his organisation would estimate the number is in single digits and is more likely to move to an alternative cloud provider if their needs are not met. Also organisations have developed a better understanding now of the economics of cloud and can compare it to private IT infrastructure.
Organizations are more likely to move to another public cloud provider if the incumbent is not meeting their needs, he said, and they have got more used to the cost economics of public cloud and can compare it to the long-term costs of running private IT infrastructure.
According to Buss, more than half the companies in Europe, the Middle East and Africa still prefer to run workloads on their private IT infrastructure, with only about 12% being public-cloud first. He also noted that the growing trend is for off-the-shelf solutions for their private IT infrastructure like Azure Stack, AWS Outposts or VMware Cloud Foundation.