Cloud computing in the UK is at a crossroads: on one path is a vibrant domestic growth sector able to compete on the international stage, down the other is an industry dominated by a few Big Tech giants and stymied by policy inaction.
In recent years, British tech companies are being overlooked time and time again for government contracts, in favour of America’s technology conglomerates. A look at Cabinet Office figures shows that the share of government contracts awarded to Amazon Web Services has skyrocketed from a mere £4.8m in 2017 to at least £293m today. The result is a growing concentration of public cloud services in the hands of AWS and a couple of other household names.
British operators are being left behind, even if they do manage to compete on service and cost. With such low market diversity, often there is no chance even to demonstrate capabilities before official contracts are awarded elsewhere, sometimes without competitive tender.
Our current path is leading us to a place devoid of a domestic cloud economy, where a massive growth industry and opportunity has been neglected rather than fostered. It will be a squandered opportunity for both wealth generation and job creation.
It has been fashionable for the government to place national tech capabilities at the heart of its post-Brexit agenda. But there is little evidence to suggest that this has translated into concerted support for the domestic cloud industry. The truth is that Whitehall is part of the problem – government spending on cloud hosting services provided by SMEs has fallen from 58 per cent in 2016/17 to just 23 per cent in 2020/21.
What is the alternative? We need only look across our borders.
The French government’s recent announcement of a “Cloud de Confiance” is a bold step in the right direction, requiring European ownership of companies that store and process critical public data. There is recognition of the strategic importance of securing sensitive information on home soil, protected from overseas intrusion.
More than that, it comprises an essential part of an ambitious industrial strategy, enabling direct investment in France’s own digital economy, improving research capabilities, allowing for the construction of new cloud tools, and creating jobs for the foreseeable future.
Europe’s Gaia-X project has created an ambitious framework in which these decisions are possible. While our neighbours are building a new generation of transparent, competitive data infrastructure and restoring digital sovereignty for cloud services, our dependence on the Big Tech giants grows daily.
In contrast to France, the government has abandoned Theresa May’s industrial strategy, replacing it with a “plan for growth”. But there is widespread concern that the domestic cloud computing industry has no place in this plan. Take the National Data Strategy consultation as a recent example – cloud services received lip-service and, despite acknowledgement that the sector is too concentrated in the hands of Big Tech, there was an absence of solutions.
Early last year, there was an uproar over a decision, and subsequent U-turn, to allow Chinese telecoms giant Huawei to build Britain’s 5G infrastructure. In acknowledging the problem, Foreign Secretary Dominic Raab said the UK had only been given a choice between three major players. He branded this a “market failure” which needed to be addressed.
Boris Johnson now finds himself at the point which led to the lack of diversity. If his government fails to foster a thriving technology environment at home, building our capabilities and investing in cutting-edge technologies, the field will be narrowed down to a few, overseas players.
It is not difficult to envisage a scenario where this becomes a threat to security if all our democratic systems rely on international tech giants to securely store their data.
The Prime Minister has a chance to prevent a future Foreign Secretary having to stand up, after the fact, and decry a lack of diversity. Instead, he can embolden himself with the opportunity to trumpet the rich tech landscape he helped cultivate.