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AWS ‘does not dominate’ cloud market, claims Amazon’s UK public policy chief

Amazon’s UK director of public policy, Lesley Smith, has told the House of Lords Communications Committee that Amazon is a “prevalent”, rather than “dominant” force in the cloud market

Amazon does not dominate the online retail or cloud market, the firm’s UK director of public policy declared at an evidence-sharing session with the House of Lords Communications Committee about internet regulation.

When asked by a committee member, during the hour-long hearing on 8 January 2019, if Amazon Web Services (AWS) “dominates” the cloud market, Amazon’s Lesley Smith dismissed the suggestion, stating that it was impossible for one company to have that level of hold on a sector that is so competitive and fast-growing.

“There is such enormous competition and speed, and I think there is a difference between dominance and prevalence,” she said.

To back this point, she pointed to the high rate of revenue growth its cloud market competitors were also experiencing, which would not be possible if Amazon was truly dominating the market.

“In an environment where you’ve got new services all the time, new providers all the time, huge amounts of investment and companies saying they’re growing 89% in a year, that doesn’t seem to me like an opportunity for anyone to be particularly dominant,” Smith continued.

“We’re a long way from a situation where you can say anyone is dominant, because the business is growing so much.”

For context, figures released by Synergy Research Group in October 2018 showed that AWS has a bigger share of the public cloud market than its four nearest competitors combined. 

“An environment where you’ve got new services and providers all the time, huge amounts of investment and companies saying they’re growing 89% in a year doesn’t seem to me like an opportunity for anyone to be particularly dominant”
Lesley Smith, Amazon

Smith also claimed it was incorrect to describe Amazon.com as dominating the online retail market. “[In] UK retail, 82% of [the market] is not online at all – it’s in physical retail [and] 18% is online. So it is pretty difficult for anyone selling online in the UK to be dominant. We are not [that] 18% – we are about 2% of UK retail,” she said.

“Our mission is to be the place where you can find anything you want online. You don’t need to be dominant to do that – you need to be good at what you’re doing, work hard and find good [retail] partners.”

Under regulatory scrutiny

Smith’s comments were made during the final evidence session of the committee’s inquiry into whether improvements need to be made to how the internet is regulated from a legal and user protection standpoint.

On that point, the committee asked – given how dependent some businesses are on cloud services – if providers should be subjected to the same level of regulatory scrutiny as the purveyors of essential services, such as electricity, water and gas.

In response, Smith said the cloud market was already subject to vast array of regulations and codes of conduct both in the UK, Europe and internationally, before going on to set out why cloud should not be considered an essential service in the traditional sense of the phrase.

“Traditionally, you would think of an essential service as being one where there is limited infrastructure, controlled by a limited number of companies without necessarily much variation,” she said.

“Electricity and water might fall into that kind of category, where you regulate because there isn’t competition and because you regard it as something [where there are] limited substitutes.”

In the case of cloud, there are plenty of alternatives out there to using it, she continued, including on-premise services and offerings from competing providers as well.  

“It is hard to say ‘we designate this [method] of delivery as essential’ when you’ve all these other alternatives,” she said. “There are not limited [numbers of] providers – there are thousands of providers, and new ones all the time, providing different levels of service.”

Previous sessions have featured input from senior representatives working for Facebook, Microsoft and Google, who were quizzed on their respective company’s UK tax-paying agreements, as well as user safeguarding matters and antitrust issues.

The amount of corporate tax Amazon pays in the UK was also raised by the committee, who asked if the level of concern expressed by “civic society” about how Amazon operates would diminish if the company paid more corporation tax.

In response, Smith said the impression some may have that Amazon does not pay adequate amounts of tax was down to lack of understanding – on an international level – about how corporate taxation works.

“Our worldwide tax rate, averaging [out] over the last three years, has been more than 30%. So we pay the corporate tax rate that most companies pay,” she said. “We pay the all the taxes that are due in every country that we operate.”

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