The single most important development in the digital economy over the last decade has been the architectural transformation from on-premise servers and software to “the cloud,” including computing and software as a service. Nothing has been more significant to reducing the costs of start-up innovation, enabling rapid scaling up and down of computing capacity in sync with demand and making progress on cybersecurity. This cloud-enabled digital infrastructure will be essential to making next generation machine learning applications broadly usable across the economy — which, in turn, is our best bet to generate the productivity we need to escape the risk of stagflation as we emerge from the COVID-19 crisis.
Given these high stakes, getting the terms of cloud competition right is now a critical economic and technology policy objective.
Competition in the cloud isn’t an easy problem to solve. Cloud providers are fundamentally a scale-advantaged business, where the bigger you are, the better. There are also likely some advantages to a certain amount of vertical integration — packaging raw computing power with integrated software packages, data security, and other related products all run on on-demand, can offer pricing and performance advantages. So, there are natural tendencies toward consolidation and, at a minimum, oligopoly.
Source: The Hill