Handful Of Monopoly Infrastructure Players – Not So Fast

This is the second post on the topic I have been emphasizing on many different forums. My earlier post, Handful Of Monopoly Infrastructure Players – A Shortsighted Idea, laid out philosophical and economic reasonings against the idea of the emergence of handful of infrastructure providers. This idea is a pet theme for many cloud pundits. As I have argued many times in the past, these pundits are either failing to understand the diversity in this world or trying to ignore diversity completely. In this post, I am going to quote a recent news and argue that such a consolidation cannot happen anytime in the near future.

Little over ten days back, Google shocked the world with an announcement that they are rethinking about their Chinese operations. They quoted an apparent attack on their infrastructure originating from Chinese government. The whole story organically grew into talks about cyber-warfare and its consequences.

Like many other well-known organizations, we face cyber attacks of varying degrees on a regular basis. In mid-December, we detected a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google. However, it soon became clear that what at first appeared to be solely a security incident–albeit a significant one–was something quite different.

These attacks and the surveillance they have uncovered–combined with the attempts over the past year to further limit free speech on the web–have led us to conclude that we should review the feasibility of our business operations in China. We have decided we are no longer willing to continue censoring our results on Google.cn, and so over the next few weeks we will be discussing with the Chinese government the basis on which we could operate an unfiltered search engine within the law, if at all. We recognize that this may well mean having to shut down Google.cn, and potentially our offices in China.

This is a perfect example of the current world order and should make us think whether such a consolidation of infrastructure players can even happen. Whether we like it or not, such attacks from government agencies are bound to happen pretty soon in the future. It need not be just China, it could be US trying to take down the so called “enemy states” or India and Pakistan fighting it out on the internet or Israel-Palestinian conflict escalating over to the net. With the internet gaining more and more importance in our daily lives as well as enterprise and government operations, the cyber-warfare is becoming a realistic possibility. With so much at stake, governments are going to do everything to protect their interests and their citizens’ interests. This translates into laws imposed by the governments on the cloud infrastructure industry. Such fears and other concerns regarding law enforcement will definitely lead to restrictions that could call for building infrastructure inside their borders.

No, I am not cooking up this scenario. Recently, Indian government was considering regulations that will force all the businesses in India to store their data on the servers inside the country, to avoid tax evasion and other types of fraud.

The concept, known as cloud computing, allows a customer to use distant servers to store and manage data. The service is cost-effective and increasingly becoming popular. However, the Finance Minister has formed a high-level committee to study the Information Technology Act (IT) and suggest amendments that will make it compulsory for firms and individuals to maintain mirror servers in India.

Even though this is not entirely related to the emergence of cloud computing as the article implies and it could have happened in the traditional hosting world too, the movement to cloud has the potential to increase such concerns. It is quite natural that governments will impose inward looking regulations to protect their bases. We should also note that many governments engage in protectionism when it comes to foreign companies doing business in their land. These factors, along with the ones I have highlighted in the previous post, will make sure that new cloud infrastructure players spring up in different parts of the world denying any possibility for the consolidation fantasized by some cloud pundits. Their fantasies can happen only if the country borders vanish in thin air. The last time I heard from people, it is not happening anytime soon. What do you think?