• Friday, July 19, 2024
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Where is Africa in the cloud? (2)

Where is Africa in the cloud? (2)

Big Tech dominates the global cloud computing market

Big Tech dominates global cloud computing nowadays, after edging out telecommunication firms, who were the original pioneers, as their infrastructure provided them with a positioning advantage.

The global cloud infrastructure service revenue was about $180 billion in 2021, according to Statista, with Amazon Web Services, Google Cloud and Microsoft Azure, so-called hyperscalers, the top 3 leading firms.

The cloud commits subscribers to not only hardware but software as well. SaaS will hardly be optimal for customers without either IaaS or PaaS or both.

Unsurprisingly, there are concerns about the growing dependence by firms on the cloud, being as it is dominated by just a few big tech firms. In the banking industry, for instance, the oligopolistic global cloud computing market is the perfect recipe for the ultimate archetypal centralisation, a source of concentration risk in an industry where risk management is designed to avoid precisely such an agglomeration of resources towards a single or few points of failure.

Unsurprisingly, the Bank of International Settlements highlighted how the increasingly oligopolistic nature of the global cloud computing industry will have “systematic implications for the financial system” in a July 2022 report.

The global cloud computing industry is consolidating even more still, with big tech backward integrating to own data centres, in addition to the software production and online platforms they already control, thus creating an almost perfect end-to-end centralisation, from data storage, application software to internet platforms.

European authorities already worry about the dominance of the global cloud computing industry by mainly American firms. Ironically, American authorities similarly worry about the growing dominance of Chinese tech firms in Africa, where, for instance, “a third of [state-backed] Huawei’s [global] cloud and e-government deals are concentrated.”

Read also: Where is Africa in the cloud? (1)

Globally, SMEs have been able to adapt to the cloud much more quickly than large firms, which remain stuck with costly legacy systems. That it takes longer, about five to ten years, for big firms to make the transition to cloud computing is one of the reasons why, according to Omdia, a UK technology consultancy, which estimates large enterprises will spend more on the cloud over the medium term to 2025.

New digital technologies, especially artificial intelligence, which require greater data storage and computing power than most firms would be able to afford or expend capital on optimally, is motivating cloud adoption beyond just cost reasons.

Incidentally, the African case is uniquely receptive to cloud computing, as SMEs constitute about 90 percent of all firms and account for 80 percent of jobs. Besides, the few big African firms do not suffer similar legacy constraints as their foreign counterparts, as their size has been contemporaneous with the evolution of the internet, and their need for a digital service proposition is a relatively recent one.

Africa’s cloud computing market is growing

Data hosting capacity on the African continent is growing, doubling to about 200 MW in 2016-19, according to the Africa Data Centres Association (ADCA), which though originally concentrated in South Africa, is now relatively better spread across the continent.

In June 2021, Senegal commissioned its new national data centre built by Huawei, the Chinese telecoms giant, where all of the government’s data will be domiciled, enabled by an undersea cable and 6,000km domestic fibre optic network. More African governments may follow Senegal’s example. Besides, local data centres are increasing their advocacy for patronage by the continent’s firms and governments.

Scandinavian countries rank highly for data centres globally, as they have some of the fastest download and upload speeds, and secure internet servers, in the world. Even so, America is by far the world’s largest cloud computing country with a market size of $116 billion, with China a distant second at $38 billion.

As African data centres must provide a comparable service to get local custom, South Africa, whose floundering power infrastructure is nonetheless the most expansive on the continent, with comparable internet infrastructure to beat, is still the favourite for global DC operators looking to establish operations on the continent.

Microsoft Amazon, Google, Huawei, and most recently, Oracle, have data centres in South Africa, for instance. South African DC firms are also the most able to compete with global players or so-called hyperscalers on the continent.

The NTU-SBF Centre first published an edited version for African Studies at Nanyang Business School, Singapore. References, figures and tables are in the

original article. See link viz. https://www.ntu.edu.sg/cas/news-events/news/details/where-is-africa-in-the-cloud