This past year has seen the big cloud players experience a rollercoaster of highs and lows. The big three—Amazon, Microsoft, and Google—have reported much more positive financial results compared to 2023, largely due to the rising demand for artificial intelligence (AI) among enterprises.
For Amazon Web Services (AWS) and Microsoft, their successes haven’t come without challenges. Regulators and competitors have ramped up scrutiny of their operations through 2024. Let’s take a closer look at the top cloud stories of the year.
In early 2024, Amazon demonstrated that it’s still a favorite for government IT contracts. It landed three significant deals worth £894 million in just one day in December 2023. Those contracts—spanning 36 months—included a £350 million agreement with HM Revenue & Customs, a £94 million contract with the Department for Work and Pensions, and a £450 million deal with the Home Office. This amount eclipses what Amazon had collected over a decade in the UK’s G-Cloud procurement framework.
Despite the G-Cloud’s objective to support smaller suppliers, AWS remains the top provider, which hasn’t gone unnoticed. In February 2024, the Crown Commercial Service (CCS) announced an increase in insurance requirements that raised eyebrows. Many small and medium-sized enterprises (SMEs) accused CCS of trying to push them out of the framework. This led to CCS putting the requirement “under review,” and by March, they dropped the change completely.
Microsoft’s grip on the public sector also faced scrutiny this year. In a notable revelation by Computer Weekly, Microsoft admitted to Scottish police that it can’t assure data sovereignty for information hosted on its Microsoft 365 suite or Azure cloud.
Both Google and Microsoft have pointed to the growing demand for AI as a factor boosting their bottom line. However, this demand has also hindered their carbon reduction goals. The two companies reported unexpected rises in greenhouse gas emissions as they expanded their data centers to support AI workloads.
As AI excitement grew, enterprises began shifting their focus to hybrid cloud solutions. Once seen as a transitional phase, hybrid clouds are now preferred by many businesses. Companies are reconsidering their public cloud commitments, often moving workloads back on-premises for reasons tied to costs, regulations, and performance.
With this shift, the hyperscalers, like AWS, began showing signs of strain. In April 2024, rumors emerged that AWS was planning to eliminate hundreds of tech and sales positions to streamline operations, reflecting a change in customer priorities from expansion to optimization.
The UK’s Competition and Markets Authority (CMA) has been investigating the cloud infrastructure market, with Microsoft, AWS, and Google finding themselves in the spotlight. The investigation questions whether these giants have used committed spending discounts unfairly or created lock-in practices with interoperability issues and data egress fees.
Another area of scrutiny is Microsoft’s cloud licensing practices, which charge more for using software in competing cloud operations. The trade group CISPE had filed a complaint with the European Commission about Microsoft’s practices and claimed they negatively impact enterprise customers. However, in July 2024, CISPE reached a $22 million settlement with Microsoft, which drew criticism from some members.
In September, Google filed its own complaint with the European Commission, aiming to challenge what it sees as Microsoft’s vendor lock-in tactics. Microsoft downplayed Google’s efforts, suggesting the complaint would garner little attention from regulators.
As we await the CMA’s findings, news surfaced in December 2024 that Microsoft is now facing a £1 billion lawsuit over its cloud licensing policies. Competition lawyer Maria Luisa Stasi, representing thousands of UK businesses, claims the lawsuit aims to combat Microsoft’s anti-competitive behavior, asserting that companies should not pay more just to run software in another cloud.