FTC investigates Google, Amazon

Cloud computing has become a crucial element of the economy, with many industries, especially healthcare, using it to access data storage, servers, networks, and other resources as needed.   

As reliance on cloud computing is set to increase, the Federal Trade Commission (FTC) is currently seeking to deepen their understanding of the effects of this dependence, particularly as it relates to competition, its relationship with artificial intelligence (AI), and the security risks that may arise from its use. 

“We want to understand at the FTC what are the factors that are leading the market to be so concentrated in the hands of a few companies and also what are some of the downstream risks that might stem from that that need to be on our radar. Both on the competition side as well as the consumer protection and data security side,” said FTC Chair Lina Kahn during an FTC Cloud Computing discussion.  

The FTC is seeking public comments by June 21 on cloud computing in three key areas; resiliency, data security, and market competition.  

Resiliency 

The impact of outages from major cloud providers can be significant due to the widespread reliance on them across many sectors of the economy. Recent incidents involving Amazon and Google  have caused lengthy internet downtime affecting large portions of the online world.  

Specific industries are particularly vulnerable, and studies have shown that when a health system shuts down, mortality rate increases.   

Cybersecurity 

A study from the Ponemon Institute on healthcare cybersecurity found that a compromise to the cloud was one of the four top common types of cyberattacks in healthcare.   

Of the healthcare organizations surveyed, 54% had been affected by a cloud compromise. Of those, 64% noted an impact to patient care including an increase in medical procedure complications (51%), a lengthier stay (50%), and an increase in mortality rates (18%).  

“We’ve normalized the fact that the cybersecurity burden is placed disproportionately on the shoulders of consumers and small organizations, who are often least aware of the threat and least capable of protecting themselves,” said Jen Easterly, director of the Cybersecurity and Infrastructure Security Agency (CISA), a Department of Homeland Security agency. 

Market competition 

Because there are so few cloud computing services, the FTC is concerned clients might have to accept undesirable contract terms, including gauged prices and an inability to leave a contract.  

Pricing in cloud computing can be bewildering due to the diverse range of services provided by various providers, each with intricate pricing models. This complexity can make it challenging for companies to compare contract terms, anticipate or regulate their cloud expenditures effectively. Furthermore, the composition and format of cloud offerings may make it tougher for clients to switch to another provider for the bulk of their cloud needs or mix and match services from multiple providers. 

Artificial intelligence (AI) might exacerbate the current lack of market competition.  

“The expanding adoption of A.I. risks further locking in the market dominance of large incumbent technology firms. A handful of powerful businesses control the necessary raw materials that start-ups and other companies rely on to develop and deploy A.I. tools. This includes cloud services and computing power, as well as vast stores of data,” Khan wrote in a New York Times op-ed.  

 Cloud computing has revolutionized the way industries store, process and share data, providing unprecedented speed, flexibility and simplicity. With the increasing reliance on cloud computing, the FTC is seeking to understand the potential risks associated with its use, including market concentration, data security, and resiliency.  

The impact of outages from major cloud providers can be significant, particularly in vulnerable sectors such as healthcare, where cyberattacks and cloud compromises have already had devastating effects on patient care.  

The FTC’s public comment period on these issues presents an opportunity for stakeholders to weigh in on the future of cloud computing and its impact on the economy, competition, and consumer protection.