On October 20th there was a glitch in the matrix. Amazon Web Services (AWS), the giant e-commerce cloud storage, suffered a massive outage that disrupted hundreds of thousands of websites and apps worldwide. Apps like Snapchat, PayPal, Venmo, and smart-home devices went offline. Airlines and gaming platforms also took a hit, and businesses and everyday life momentarily came to a screeching halt. The outage stemmed from a glitch in Amazon’s U.S. East-1 Data center located in Northern Virginia, which is the same region of the country that has suffered repeated failures in recent years.
Unfortunately, this was not a fluke; rather, it constitutes a predictable consequence of allowing one corporation to have unfettered control over the internet.
Jeff Bezos has methodically grown Amazon into a multi-trillion-dollar empire that impacts our everyday lives, powers the servers that keep hospitals online, operates the logistics networks that deliver packages, and runs the cloud infrastructure that supports so many other companies. When that infrastructure faltered, millions of people learned just how fragile a digital economy becomes when one company controls roughly a third of the internet.
There is a great risk in the economy becoming reliant on just one company for so many critical industries. Cloud computing today is more concentrated than retail banking, where the government caps the largest bank’s share of deposits.
Government regulators have become concerned with the status quo in the cloud storage market: In 2019, the Federal Reserve sent examiners to an Amazon Web Services facility in Virginia to evaluate the systemic risk, and the United Kingdom did similar evaluations earlier this year.
Regulators have also been concerned with the implications of Amazon’s dominance in the online retail marketplace, and in a landmark 2023 lawsuit the Federal Trade Commission accused Amazon of maintaining a monopoly of power through a set of interlocking anticompetitive and unfair strategies. In effect, the suit alleges that Amazon is both a player and the referee, which allows it to determine the outcome in its vast marketplace.
The internet is a critical infrastructure, every bit as essential as roadways or power lines. We do not allow one company to own the nation’s power grid, so why do we allow one to own so much of our digital grid?
Structural separation between Amazon’s core businesses–retail, logistics, and cloud computing–is long overdue. Its web-hosting arm should stand apart from its retail operations. Sellers and consumers deserve a fair marketplace that isn’t controlled by their biggest competitor.
It is up to Congress to hold hearings to ask how concentrated the cloud market has become and decide whether that threatens financial stability, national security and market competition.
However, limiting the monopoly of power by Amazon is only one part of the problem. Policy makers must confront the more general systemic risks of allowing a handful of cloud providers to control the digital infrastructure. The cloud that powers hospitals, schools, and essential services should not depend on the same company that profits from everyone’s Prime Membership.
When a single corporation becomes the platform for everything from commerce to data, society inherits its risks and bends to its priorities. That is not a win for consumers.