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Cloud computing is the invisible backbone of many modern businesses, including banks, airlines, e-commerce companies, healthcare providers, and logistics firms. Yet, beneath this digital progress lies a systemic problem that is rarely discussed. What are the risks of the world’s economic engine depending on just three providers?
“If AWS”—Amazon Web Services, the on-demand cloud computing firm owned by Amazon (AMZN)—”were to go offline for even a matter of hours, Netflix, Coinbase, and even parts of the U.S. government would be taken offline, disrupting everything from financial transactions to emergency response,” Jacob Kalvo, a cybersecurity expert and CEO at Live Proxies, told Investopedia. We explore these and other concentration risks from tech’s reliance on cloud computing below.
Key Takeaways
- A major outage, cyberattack, or operational failure at any one of these cloud giants could trigger a domino effect throughout the global economy.
- Investors and business leaders should assess their reliance on cloud services within their portfolios and consider diversification strategies.
Why Three Giants Controlling Two-Thirds of Global Business Infrastructure Could Be a Problem
Microsoft Azure, owned by Microsoft Corporation (MSFT), Google Cloud, owned by Alphabet Inc. (GOOGL), and AWS collectively control about 65% of the cloud infrastructure market. This digital oligopoly means that some of the most critical business operations, including payroll, patient records, and payment processing, often depend on servers controlled by just three firms.
The December 2021 AWS outage served as a preview, freezing Amazon deliveries, taking airline reservation systems offline, and disabling smart home devices nationwide. More recently, in June 2025, a widespread Google Cloud outage impacted content streaming, cloud productivity, gaming, and AI services for several hours. Downstream providers and customers, from Cloudflare to OpenAI, were also affected.
Worries about concentration in cloud computing providers are just about temporary outages. Vendor lock-in, the difficulty and high cost of switching cloud providers, turns technical choices into economic traps. Proprietary tools and high data exit charges mean that moving workflows or data away from a provider can cost millions and take years, leaving organizations stuck even when planning for resilience.
The Domino Effect That Few Are Modeling
Unlike financial markets, which have central clearinghouses to guarantee transactions and act as backup systems, there is no equivalent for the cloud—no universal backup to automatically take over, leaving critical systems vulnerable to sustained disruptions. When a major provider experiences an extended outage, financial markets, healthcare operations, and public sector systems may be impacted all at once. A single failure could halt high-frequency trading, disrupt supply chains, and disable emergency platforms, creating widespread economic ripple effects.
A 2023 Uptime Intelligence survey suggests that even short-term outages can be costly, with more than half (54%) of data center manager respondents saying their “most recent significant, serious or severe outage” cost more than $100,000 and 16% saying the expense was more than $1 million. Reputational harm, regulatory fines, and customer attrition often amplify the fallout, hammering entire industries simultaneously. The 2024 CrowdStrike global IT outage, for example, caused more than $5 billion in economic losses for Fortune 500 companies alone.
Tip
Policymakers have raised concerns about market concentration among major technology companies, with ongoing federal antitrust cases against Google, Meta Platforms Inc. (META), Apple Inc. (AAPL), and Amazon alleging monopolistic practices that have prevented new entrants from challenging their dominance in areas like search, social media, and artificial intelligence.
Protecting Your Portfolio from Cloud Risk
With cloud dependence a systemic risk, companies and investors can take several steps to protect themselves:
- Diversify cloud providers: Avoid total reliance on any one platform; consider hybrid or multi-cloud strategies, but this approach may introduce more complexity and may not cut your overall risk as much as you hope.
- Geographic diversification: Look for investment prospects in markets with different cloud ecosystems. Chinese companies rely primarily on Alibaba Cloud and Tencent Cloud, while European firms increasingly use local providers like OVHcloud or Deutsche Telekom’s cloud services. Investing in these regions can provide a hedge against the concentration of U.S. cloud providers.
- Model outage scenarios: Financial and operational stress tests should now include major cloud incident scenarios, not just cyberattacks or physical disasters.
- “Cloud resilience” company screening: Check potential investments for their disaster recovery and multi-cloud strategies.
- Actively manage vendor lock-in: Scrutinize contracts, minimize the use of proprietary tools, and plan for eventual data migration costs upfront.
- Demand transparency: Push cloud providers for greater clarity on security, operational resilience, and incident response—especially in high-risk sectors such as finance or healthcare.
- Monitor regulatory developments: The issue of cloud concentration risk is gaining more attention, but time will tell if any regulatory changes match it.
Tip
Businesses and, where appropriate, investors can check their insurance coverage for blind spots in this area, given that traditional cyber policies weren’t designed for systemic cloud failures.
Bottom Line
The digital economy’s dependence on a few cloud giants is a new form of systemic risk, with potential consequences far greater than many have anticipated. Outages, cyber incidents, or political conflict affecting a top cloud provider could bring key sectors to a standstill, triggering domino effects beyond those often modeled in stress tests.
