The Cloud Market: A Game Only the Giants Can Win?
The Sharks of the Cloud Market: Is There Still Room for the Rest?
Did you know that just three companies now control around 63% of the global cloud infrastructure market?
Amazon Web Services (AWS), Microsoft Azure, and Google Cloud - often referred to as the "Big Three" or, as some say, the "Sharks" of the cloud world - dominate the landscape.
These giants have scale, resources, and ecosystems that smaller providers simply cannot match. But as the power concentrates further, the question becomes louder:
Is the game already decided or is there still room for others to grow?
The Current Landscape: Three Players at the Top
According to Synergy Research Group (Q4 2024):
The next closest, Alibaba Cloud, accounts for just 4%, with all other providers sharing the remaining one-third.
This isn’t a recent development. In 2018, AWS held 34%, Azure 15%, and Google 7%. Nearly half of the market was still in the hands of smaller players back then.
Fast forward to today, and the picture looks very different:
The top three keep growing their lead, leaving less space for smaller providers to compete.
Globally, this story plays out consistently, though regional dynamics vary. In China, Alibaba remains strong locally, while in Europe, data sovereignty concerns give smaller regional clouds a foothold. But the global trend toward market dominance is undeniable.
The Hidden Costs of Market Dominance
When three companies hold this much power, the risks extend far beyond market share statistics.
1. Reduced Choice for Customers
Fewer good alternatives limit buyers’ ability to negotiate on price, service levels, and terms.
2. Vendor Lock-In
Gartner flags "the concentration of a handful of cloud vendors" as "a significant emerging risk." Switching providers can be technically complex, expensive, and time-consuming, made worse by data egress fees that are often 5-10x higher on the Big Three compared to smaller providers. 🔗 cio.com
The EU’s Data Act aims to address this by requiring easier switching and portability between cloud platforms, but the problem persists.
Source: 🔗 digital-strategy.ec.europa.eu/
3. Pricing Power Abuse
There are growing concerns about bundling practices. Microsoft’s Office 365 licensing, tied to Azure consumption, is under EU antitrust scrutiny 🔗 Infoworld
Google Cloud has formally accused Microsoft of "hampering customers’ ability to switch providers" - estimating the cost to European businesses at €1 billion 🔗 Infoworld
4. Stifled Innovation
Fewer competitors mean fewer incentives to innovate. Gartner warns that this could "harm long-term innovation goals" 🔗 ITPro.com.
If most workloads are tied into one hyperscaler, adopting a disruptive new service from a challenger becomes far less likely.
5. Systemic Risk
Market dominance increases the risk of service failures and security problems. If one of the big providers has an issue, it can quickly turn into a global incident.
Gartner (Emerging Risks Report): "The more applications that depend on a single provider, the greater the potential wide-scale impact if that provider has an incident."
Source: IDG Communications
The issue isn’t just about scale - it’s about how scale limits choice.
Voices from the Ecosystem: The View from Smaller Providers
For many MSPs, CSPs, IT resellers, and regional cloud vendors, competing against hyperscalers feels like playing a game where the rules are stacked against them.
Aggressive Incentives and Free Credits
Startups and enterprises are often attracted by the Big Three with free cloud credits - sometimes worth hundreds of thousands of dollars. Once these credits run out, migrating workloads away becomes costly and complex.
"It’s like a drug dealer offering free samples. Hyperscalers use free credits to hook customers early, leaving them trapped and dependent." "This creates a monopoly, stifling innovation and preventing a truly competitive market."
Mark Boost (CEO, Civo)
Source: CIVO
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Case Study: The Fall of UKCloud
The story of UKCloud, once a major player in the UK government cloud market, underscores these challenges. After government contracts increasingly shifted to AWS and Microsoft, UKCloud was forced into liquidation in 2022 🔗 The Register
"Cloud credits are not about competition; they’re about customer acquisition and customer lock-in."
Simon Hansford (former UKCloud CEO)
Smaller providers aren’t standing still. Many are pivoting toward:
But the competitive field remains uneven.
Why Hyperscalers Continue to Win
The success of the Big Three isn’t just about marketing muscle. Their advantages are structural:
To their credit, the hyperscalers help lower costs and bring powerful new tools to the market. Their innovations like managed Kubernetes, GPUs for AI, or serverless platforms often set the industry standard.
But their dominance also discourages competition and slows the rise of alternative solutions.
Regulation: Can Policy Level the Playing Field?
European Union
The Digital Markets Act and Data Act directly target concentration and lock-in. The DMA has designated Amazon, Microsoft, and Google as "gatekeepers," requiring interoperability and fair licensing terms.
Source: Digital Markets Act
The CISPE complaint (supported by AWS) against Microsoft’s licensing model is under review, focusing on whether bundling unfairly restricts market access.
United Kingdom
The CMA’s investigation, started by Ofcom, found major competition problems in the UK cloud market - mainly high data transfer fees and bundling of services. Possible solutions include limiting these fees and making contract terms easier to understand.
United States
While the U.S. has not yet filed formal charges, the FTC’s request for information on cloud practices signals growing interest. Regulators are watching issues like loyalty discounts and multi-year spend commitments closely.
Source: Federal Trade Comission
Asia and Other Regions
Regulators in Japan and South Korea have raised similar issues, focusing on how hard it is for customers to move their data or switch providers.
Across the world, governments are starting to see that the cloud market may be becoming too controlled by just a few big players.
Is There a Path Forward for Smaller Players?
While regulation may help, strategic collaboration among smaller providers could be another piece of the puzzle.
But ultimately, the solution will also depend on buyer awareness. Enterprises and government agencies must demand portability, avoid vendor lock-in, and explore hybrid strategies.
This isn’t about "us vs. them." It’s about ensuring that choice, innovation, and flexibility remain part of the cloud conversation.
Join the Discussion
Is the cloud market destined to remain an oligopoly?
Or can flexibility, collaboration, and smart regulation create space for the rest to grow?
If you’re a provider, MSP, or partner, what’s your experience? Have you faced these challenges?
Please share your thoughts.
Sources: Synergy Research Group, Gartner, European Commission, UK CMA, CIO.com, The Register, Infoworld, Civo.com.