Did we just re-invent the Oligopoly, only calling it ‘AWS’ this time?

In what it claims is a growing trend, public sector IT news and analysis site diginomica government reported yesterday on stealthy moves by central government to effectively re-invent the practice of only giving work to a small set of suppliers by handing out major contracts to a handful of US cloud companies.

The story’s author, respected journalist and commentator Derek du Preez, the website’s editor, claims he wrote the piece in the light of numerous conversations over the past few months with UK cloud vendors.

They are becoming, he claims, “increasingly frustrated with government buyers for ‘handing over’ public sector contracts (and data) to both Amazon Web Services (AWS) and Microsoft Azure [and] to some extent, Google Cloud Platform”.

As a result, we are duplicating the over-concentration of government IT work and money in the hands of a new ‘Oligopoly‘ – or, as du Preez puts it, “These sources argue that this is happening at an increased pace and that the two American technology giants are effectively forming an Oligopoly within the supplier base to government.”

diginomica government claims its findings are based on the procurement data that Whitehall itself is making available – check for yourself here.

And in effect, the reliance on AWS and Azure is shutting out the very UK tech SMEs that, since the heady days of the Coalition and Francis Maude back in 2010, government said it wanted to champion:

“Procurement frameworks such as G-Cloud, stricter ‘red lines’, and ambitious SME spend targets were all introduced a number of years ago and have since been touted by politicians and senior civil servants as a way of supporting UK business and breaking up the stranglehold of larger suppliers in Whitehall. 

“However, the data, and the perception of those working in industry and in government, is that this isn’t being followed through with any significant spend (at least, not in the way that it used to be) in comparison to the money being spent with AWS, as well as Microsoft and GCP. “

“The frustration felt by many in the SME community is easy to understand,” du Preez concludes, after a serious look at the issue with inputs from many stakeholders and which we recommend Think Digital Partner community members read in full.

“A decade ago the government was promising to do everything it could to level the playing field with large vendors. And for a few years was making great progress; British companies were formed, SMEs grew and careers were made.

“To then see that business is all of a sudden being handed to US tech giants feels like a kick in the teeth.

“If UK SMEs felt that there was some real commitment to UK business, and a better understanding of what that business should be, I don’t think we’d be in this situation.”

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