Britain Now Belongs To Amazon And Microsoft – Konrad Rekas

The Head in the Clouds: Amazon Empire

Cloud space industry seem to be at the same time another speculative bubble and the serious threat to the data security and privacy. In the UK this sector organised in the form of classical oligopoly with the full awareness and support of the British Government. Thus it is not surprising that at the same time the British public institutions ignore direct braking the law by the Amazon, one of the most serious actors of the cloud industry.

Britain belongs to Amazon and Microsoft

Not only in Britain contracts between public institutions and Amazon Web Services (AWS) are highly significant. According to Ofcom (government-approved regulatory and competition authority for the broadcasting, telecommunications and postal industries) “The market for cloud infrastructure in the UK was worth £7.0 billion to £7.5 billion in 2022”, within which, “There are two leading providers (…) Amazon Web Services (AWS) and Microsoft, who had a combined market share of 70% to 80% in 2022. Google is their closest competitor with a share of 5% to 10%. Collectively these firms are referred to as the ‘hyperscalers’ and the vast majority of customers use their cloud services in some form”.[1] Indicators of how much of this comes from public funds vary, Ofcom’s October 2023 report cites a total of £363m in total public contracts procured through the ‘G-Cloud’ platform in 2022-23, but we also know that within two months of this report Amazon signed an additional three public contracts totalling £894m. Amazon Web Services is estimated to control about 30% to 40% of the total UK cloud market.[2]

As we can see it is a classical oligopoly.[3]

Everyone is involved

Ofcom investigated the supply of cloud services in the UK and its final report dated 5th October 2023 revealed that there are “reasonable grounds to suspect” that some “features of the market for public cloud infrastructure services prevent, restrict, or distort competition in the UK”. Ofcom decided to refer the UK public cloud infrastructure services market to the Competition and Markets Authority (CMA).[4] Yet despite that ongoing investigation, public institutions are still being actively incentivised to sign and renew contracts with AWS. In December 2023, the Crown Commercial Service renewed a preferential pricing agreement with AWS, called a One Government Value Agreement (OGVA). This agreement allows “public sector IT buyers to access committed spend discounts on AWS products and services, with the first iteration of the three-year Memorandum of Understanding (MoU) offering users baseline discounts of up to 18%”.[5]

The Home Office,[6] HM Revenue and Customs,[7] and Department for Work and Pensions[8] already renewed their three-year contracts in December, totalling £894m, more than the total for all AWS’ UK contracts over the previous decade. Among four other central government contracts that we had previously noted were due to expire before the end of April 2024 (Ministry of Justice, HM Land Registry, The Competition and Market Authority (CMA) and Department for Levelling Up, Housing and Communities (DLUHC), DLUHC made major transfers of additional data to AWS,[9] renewing their contracts with this corporation. Even the CMA itself in May 2024 renewed own contract with Amazon Web Services, benefiting from the preferential terms of the One Government Value Agreement and doubling the contract value to the record amount of £437,151[10]. That only increased doubts whether such decisions are ethical in the middle of an investigation into the company’s monopolistic practices[11].

Privatisation of the e-Britain

Luckily for the Government such issues have been followed mainly by the IT media although some positions about the cloud market domination have been published also in The Guardian. Other mainstream media in the UK consistently ignore the fact that international corporations actually control data stocks formally managed by public trust institutions. This is the real privatisation of the British e-state and the Labour Government clearly promotes investments aimed at centralising data management, and therefore beneficial for hyperscale corporations[12]. Thus AWS and Microsoft strike back threatening that further antitrust proceedings “could negatively impact their ability to invest in its UK infrastructure”[13].

Amazon human ZOO

Amazon in particular feels stronger than HRS Government, even though this corporation locates its core business, large warehouses and logistics centres in the grey zone. A significant example of such practices is the fight by Amazon warehouse workers in Coventry for the legalisation of their trade union organisation. Before losing final attempt for the trade union recognition in July 2024[14], GMB Amazon they fought a real war with a global corporation. Amazon replaced employees involved in creating a trade union with migrant workers acquired among the students and through international sponsorship. Newcomers were qualified as skilled workers, despite working on a line without a training, nor language, as sponsored visa applying procedures were even shorter than the UK student visa ones. Amazon has not paid for their work performed while they were waiting for confirmation of their status and right to work. Newcomers were too stressed to ask for this money. Students were misinformed, that they are legally not allowed to join the union. The rapid increase in employment has not reduced the burden on existing employees but is primarily the result of an attempt to artificially reduce the percentage of employees belonging to the union in order to justify the lack of its recognition by the management. Amazon lures workers halfway across the globe, creating a modern version of a human ZOO just to avoid negotiating wages and employment terms with legal union representation. And there are reasons for that as we know a fundamental disproportion between the work efficiency and wages in Amazon warehouses. With a productivity of £3,000 per day, the average daily wage is approximately £135. Surplus value achieved by Amazon is therefore record high even for this scale of retail.

All this happens with the knowledge and consent of the British state, which once again turns out to be just a shell covering the interests of large corporations which already have more and better organised data than those available to their customers. It is not Britain, therefore, that is the empire; it is the Empire that grew out of Britain.

Konrad Rekas

[1] https://www.ofcom.org.uk/__data/assets/pdf_file/0027/269127/Cloud-services-market-study-final-report.pdf

[2] https://www.theguardian.com/business/2023/oct/05/amazon-and-microsofts-uk-cloud-computing-dominance-faces-investigation

[3] https://www.srgresearch.com/articles/cloud-market-gets-its-mojo-back-q4-increase-in-cloud-spending-reaches-new-highs

[4] https://www.computerweekly.com/feature/The-CMA-anti-trust-investigation-into-AWS-and-Microsoft-explained-Everything-you-need-to-know; https://assets.publishing.service.gov.uk/media/656dfdf59462260705c568c4/AWS_Response_to_CMA_s_Issues_Statement_dated_23_November_2023.pdf

[5] https://www.computerweekly.com/news/366562418/UK-government-quietly-renews-public-sector-preferential-pricing-agreement-with-AWS

[6] https://www.publictechnology.net/2024/01/16/business-and-industry/dbt-becomes-latest-department-to-take-advantage-of-aws-discount-deal-with-13m-contract/

[7] https://www.computerweekly.com/news/366562452/Concerns-raised-over-Home-Offices-450m-mega-cloud-deal-with-AWS

[8] https://www.datacenterdynamics.com/en/news/aws-wins-94m-contract-with-uk-govs-dwp/

[9] https://dluhcdigital.blog.gov.uk/2023/11/16/migrating-our-data-from-gov-uk-platform-as-a-service-paas-to-amazon-web-services-aws/

[10] https://www.datacenterdynamics.com/en/news/uk-competition-and-markets-authority-doubles-spend-on-aws-while-investigating-company/

[11] https://www.computerweekly.com/news/366558721/Conflict-of-interest-concerns-raised-over-CMAs-use-of-AWS-UK-public-sector-discount-scheme