A global outage at Amazon Web Services (AWS) on Monday morning knocked out a slew of apps, websites and essential systems across the world. Banking services, communications apps and even entertainment services were hit as the world was served a reminder of how reliant society is on a handful of powerful, monopolistic firms.
The disruption affected over 2,000 companies and millions of users, and the chaos laid bare that modern society is now critically dependent on Amazon and other massive firms to maintain what is now critical digital infrastructure.
However, this is not the first time modern society has been warned. The Balanced Economy Project previously warned of this very issue when we published our Breaking Up the Giants of Harm in the wake of a chaotic IT outage that affected Crowdstrikesoftware on Microsoft-powered computers in July of 2024.
“Governments and economic regulators have, since the 1980s, turned a blind eye to a handful of giant companies steadily gaining chokeholds in global markets. Banking, agriculture, digital technology, publishing, music, pharmaceuticals and more are dominated by firms that have grown too big, and too powerful,” we warned at the time.
That warning now reads like a prelude to this week’s events. AWS’s collapse shows how deeply Amazon’s chokepoint runs — a single error or point of failure was enough to interrupt companies and users ranging from Snapchat, Signal, and Duolingo to Coinbase, PlayStation Network and even Lloyds bank in the UK. In essence, the world suffered a digital blackout — estimated to have cost hundreds of billions of dollars — because of a single point of failure at a single company. Despite the outage, Amazon stock rose on Monday.
“We urgently need diversification in cloud computing. The infrastructure underpinning democratic discourse, independent journalism and secure communications cannot be dependent on a handful of companies,” said Dr Corinne Cath-Speth, head of digital at Article 19.
Cori Crider, executive director of the Future of Technology Institute, drew a similar conclusion: “The UK can’t keep leaving its critical infrastructure at the mercy of US tech giants. With Amazon Web Services down, we’ve seen the lights go out across the modern economy.”
Amazon argues that its dominance is a positive. It told Parliament last year that AWS provides “multiple layers of protection, ensuring businesses can reliably maintain operations.”
Yet this week has clearly proven that that is not the case. As per our report last year, the idea that “bigger” is somehow safer, cheaper and more reliable is precisely what makes the modern economy so vulnerable, particularly because it concentrates power in a handful of global companies.
It is a trend that has taken shape for decades, as the below graph demonstrates how concentrated markets and concentrated wealth has skyrocketed in lockstep with each other since the 1990s:
The UK’s Treasury Committee has since written to the government, asking why Amazon has not been formally designated a critical third party to the financial sector — a move that would bring it under much needed regulatory oversight.
But once again, it is vital to point out that regulatory oversight — especially after the fact — is not good enough. The UK and other governments around the world that have seen their national industries harmed by the AWS outage must collectively call for structural change that frees the modern economy from the control of, and reliance on a few massive tech giants.
As per our Giants of Harm report, lawmakers and regulators ought to pursue breakups of these firms as a tool “like a Swiss army knife” that can bring about an array of positive outcomes, including eliminating conflicts of interest, unblocking economic chokepoints, restoring choice, promoting fair competition and promoting economic resilience.
The AWS may have only lasted hours, but its message and lesson ought to be a lasting one. Per recent POLITICO coverage, the AWS outage was “everyone’s ‘I told you so’ moment” and served as a “great moment for everyone who wanted to make a point about Europe’s heavy reliance on US technology.” After all, a single company’s internal fault can now ripple through the many key strands of the global economy.
For years, governments have accepted the myth that centralised digital power will bring about stability. But this week served as the latest reminder that it simply does not. When one massive company’s error is significant enough to literally pose existential risk to thousands of companies and industries, structural reform must follow.
Weekly highlights:
A pending $2.4 billion agreement between UC Investments, the investment arm of The University of California and Big Ten, could lay the groundwork for the school to buy a stake in the college athletic conference before being allowed to sell ownership rights back to teams. The move could pave the way for private capital to penetrate college athletics and represents, per PitchBook, “perhaps the largest case of private capital moving into college athletics to date.” A reminder that private capital has already poured into professional sports to the tune of billions of dollars, creating a risk that short-term profit will now be prioritised over long-term sustainability at the college level as well.
An update on Apple’s legal troubles: the tech giant is in Luxembourg this week for a hearing related to the EU Digital Markets Act. The hearing will be the latest in a long-running clash between the company and EU competition watchdogs.
Soundbite of the week: A letter to the Irish Government
A large and plurality of organisations (including the Balanced Economy Project) have written to the Irish Government to express “outrage and misgivings” following the recent appointment of the third Commissioner of the Irish Data Protection Commission, Niamh Sweeney:
“The appointed candidate has held a long-standing senior public affairs role at one of the largest technology platforms (META) that the DPC is mandated to regulate. In her most recent role at a consultancy called Milltown Partners, which ended only last August, she continued to advocate on behalf of these platforms. She may also be subject to NDA and other contractual obligations that prevent her from supervising these firms. This appointment therefore raises serious questions about the DPC’s independence at a time when its impartiality is of critical importance for the entire Union, and when public trust is already fragile.”
Data mining: Private equity’s latest explosion in the US
Latest figures from data analytics website PitchBook reveal that US private equity dealmaking rebounded in the third quarter, reversing a slowdown seen earlier in the year.
Deal value as well as deal volume are up year over year, painting a worrying picture for anti-monopoly activists invested in the fight for a democratic and truly competitive economy. This serves as a good reminder to read previous Counterbalance editions that offer a deep dive into why the influence of private equity is so damaging to key infrastructure, including healthcare.
The Counterbalance is published every Thursday. Please send any thoughts and feedback to scott@balancedeconomy.org.
Well, for what it's worth, I'm steadily unplugging from this matrix of wealth and info concentration. No 'social media', no 'utilization' of AW 'Services' and diminishing reliance on the energy of 'The Grid' (aka, The Machine). Thanks for this important reporting.
Tim Long, Just Up the Hill from Lock 15.