As the world's dominant hyperscale cloud provider, Amazon Web Services (AWS) has little motivation to make it easier for customers to navigate today's multicloud computing environments. AWS' power as No. 1 might enable it to ignore industry cries for multicloud, but the tech giant's taboo on this popular cloud operating model could limit its overall prospects and heighten regulatory concerns over the company's anti-competitive practices.

At the hyperscaler's re:Invent 2023 conference in Las Vegas last week, AWS emerged as an industry outlier for its silence on multicloud. While CEO Adam Selipsky and other executives unveiled swaths of announcements at each keynote, they seldom referred to where AWS' services are ultimately positioned: as just one of multiple cloud providers modern enterprises are working with.

In the past five years, quarterly revenue for cloud infrastructure services has jumped from around $15 billion to $63 billion, with Amazon leading the way. The hyperscaler has steadily maintained a 32%–34% market share for close to a decade, according to Synergy Research Group. Despite its number 1 status, two-thirds of the market are not AWS customers.

“In reality, most enterprises use multiple clouds,” AWS enterprise strategist Tom Soderstrom told me during an interview at re:Invent. He said it is "harder to manage multiple clouds than one cloud. But sometimes you merge with other companies, and it's just reality,” he said.

Soderstrom pointed to an AWS blog on Cloud Centers of Excellence – or a team dedicated to designing and implementing cloud-related best practices, guidelines, and governance policies – as “a good start. We found that was very successful.”

That's a meager answer to the issue of multicloud complexity compared to the messages from cloud providers like Oracle, VMware, or IBM. However, perhaps that's because those vendors have no choice but to fit themselves in among the dominant providers – making it as easy as possible to adopt their services in addition. It's the only way they have a fighting chance.

Multicloud stimulates competition

Aside from the value of listening to customer concerns, AWS would benefit from embracing multicloud through a potential quelling of regulatory concerns over the hyperscaler's anti-competitive practices.

Earlier this fall, U.K. communications regulator Ofcom uncovered notable concerns about the country’s cloud infrastructure market, which is dominated by AWS and Microsoft at a combined market share of more than 70%. The investigation identified that egress fees (charges paid by customers to move their data out of the cloud), technical barriers to interoperability, and committed spend discounts are the features of the market that warrant the most concern.

“This is a sign of a growing momentum of folks that want more openness between the cloud providers,” Forrester principal analyst Tracy Woo told SDxCentral.

Egress fees are significantly higher at AWS (and its hyperscale rivals) than at smaller cloud providers. These high costs can discourage hyperscale customers from adopting a multicloud model and ultimately work to prevent customers from switching to a different cloud provider altogether, according to the regulator.

In addition, hyperscale customers tend to experience technical barriers to both interoperability and portability – meaning customers must reconfigure their applications and data for compatibility with different cloud environments.

And while committed-spend discounts are great for reducing existing customers’ costs, “the way these discounts are structured can incentivize customers to use a single hyperscaler for all or most of their cloud needs, even when better-quality alternatives are available,” Ofcom said.

Why regulators are concerned

Moreover, regulators are concerned that the difficulty of switching and using various cloud providers will make it harder for smaller competitors to grow and meaningfully challenge AWS.

According to Woo, these concerns serve as evidence for the growing sentiment that users want hyperscale cloud providers to be more open, more transparent, and willing to adapt to the multicloud mindset.

Furthermore, simplifying the complexity of the multicloud environments in which many organizations accidentally find themselves shouldn’t be left to third-party vendors. “[That’s] actually the responsibility of the public cloud providers,” Woo said.

But that idea is a “widely known secret,” and “no one has really done much to – or has been able to – enforce it really well,” despite the general desire to “nail these major tech providers on their anticompetitive practices,” she said.

AWS' multicloud taboo is profit-driven

Without regulatory action, these anticompetitive strategies will likely continue because they're advantageous for AWS and the other hyperscalers that follow suit. Amazon's goal – as with every business – is to generate revenue and return financial value to shareholders and investors (even if that feels buried under all the marketing and sales mantras).

Canceling an Amazon Prime subscription shouldn't be a headache-inducing process, but it often is. Why wouldn't the cloud side of the house employ a similar structure to ensnare subscribing customers?

That's exactly where antitrust concerns develop, and they aren't unwarranted. AWS avoids multicloud because it can afford to – it's already the primary home for a majority of its customers' workloads. And it's trying its hardest to keep things that way.

“We want to be the best place to run your application,” AWS VP of Kubernetes Barry Cooks told SDxCentral. While he claimed the hyperscaler is “fully supportive of people going the direction they choose to go,” the company’s goal is still to “win the workload,” Cooks said.