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Cornering the Market on Cloud Computing

Author: Michael Scarborough 2 January 2013 426 views No Comments

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Many of the things we do in IT have become commoditized, and many more aspects of IT will be commoditized over the coming years. Cloud computing is an example of the commoditization of IT resources. In fact, one of the key benefits of cloud computing is that computing resources become commoditized. When we need more computing resources we go to the cloud and get more, when we need less we release computing resources back to the cloud.

However, is this possibly one of the greatest risks of cloud computing as well?

When I think of commodities I often think of what the Hunt brothers did in the late 1970s with silver. For those readers not familiar with the story, basically the Hunt brothers purchased more than half of the world’s deliverable supply of silver. At one point the price of silver was driven so high, that the jeweler Tiffany took out a full page ad in the New York Times admonishing the Hunt brothers for hoarding silver and for the effect this had on others. In fairness, the Hunt brothers aren’t the only people that have attempted to corner a market on a commodity. Similar attempts to corner commodity markets occurred in the 1990s with copper and as recently as 2010 in the European cocoa market.

If cloud computing is a commodity that anyone can reserve as needed, what’s to stop someone from cornering the market on cloud computing resources? At the moment there’s most likely a glut of a computing power, so this isn’t a risk that’s going to materialize immediately. However, what happens when the public cloud computing service provider market consolidates and there are only a handful of big players remaining that sell public cloud computing services?

My thought is basically this: If someone wanted to deny a competitor access to public cloud computing resources, couldn’t they simply purchase all of a service provider’s available cloud resources, thereby denying their competitor access to that service and potentially causing significant business impact? If they wanted to be really disruptive, they could buy up the capacity of multiple public cloud providers, which might prevent a competitor from switching to an alternative provider.

In theory, I think this attack could work without any insiders being involved, but with one or two insiders assisting, a bad actor could really cause havoc for other public cloud computing consumers.

If computing is becoming a commodity that we can get on an as-needed basis, then the risk of someone cornering the market on public cloud computing is a possibility.

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