The big cloud debate: US giants vs UK providers
Global cloud giants have gone to great efforts to talk up their UK credentials in recent months, but British provider UKCloud has called them out, questioning the investments and their wider impact on the economy. Hannah Breeze navigates the debate
As far as global giants Microsoft and Amazon Web Services (AWS) appear to be concerned, the UK is the place to be. Whereas in years gone by, UK customers would have counted themselves lucky to have their data hosted on the same continent, nowadays, they are almost spoilt for choice as to where in the UK they can store it. In the last few years, both Microsoft and AWS have launched UK datacentres, or regions, as the latter refers to it. On top of this, Microsoft is rolling out a rigorous training programme for its Azure offering, and earlier this year, AWS pledged to train 1,000 disadvantaged youngsters and military leaders, to offer them a new opportunity and to help plug the technology skills gap at the same time.
While investing in the UK, opening local facilities and talking up the importance of the UK to their respective global operations may appear to be only positive, the moves have, in fact, ruffled feathers. UKCloud, formerly SkyScape, the government cloud provider, has hit out at the pair, accusing them of overstating the impact of their UK investments, and warning the government that it could be "sleepwalking into a duopoly", returning to what it sees as the bad old days when just a few, huge suppliers gobbled most public sector contracts.
On a blog post, UKCloud CEO Simon Hansford said:
"There is now the very real risk that a small handful of US tech giants could dominate the tech sector [in the UK]. Not only will their size and reach squeeze out the partner ecosystems to a far greater extent than ever seen before, but they have little or no local R&D. They are hoovering up workloads from thousands of companies - leading to the loss of many skills.
"Leading the pack are AWS and Azure, each of which now boasts its own presence in a UK datacentre, but look under the covers and things are not quite as they might first appear.
"While in its recent announcement AWS claimed to be investing in the UK's cloud future, the global players are not actually investing anything much in the UK at all. The new facilities do not represent net new investment in the UK, as these players are simply leasing facilities that already exist and while they are installing some equipment of their own, it is all imported - almost none of it is made in the UK.
"And none of the innovation and little of the management for these facilities will be based in the UK. Unlike IBM Hursley that once provided many high-skilled, UK-based R&D jobs, AWS and Azure have their innovation centres on the US west coast along with much of their support and management. Their local facilities have minimal staffing levels and most of their UK operation is simply sales and marketing."
When CRN put these claims to Microsoft, it declined to comment, while AWS was not available to respond. But partners of both firms leapt to their defence.
"We're British taxpayers and I am proud of that, therefore, like other British taxpayers, I would much prefer if the government spent money within the UK, not with organisations who pay next to nothing in tax." - Lawrence Jones
Mitchell Feldman, chief digital officer at Microsoft partner RedPixie, told CRN he believes UKCloud's claims are a "crude summary" of the UK cloud landscape. He said that Microsoft - which is being driven internally by cloud - is a force for good in the UK technology industry.
"[Microsoft] is one of the biggest employers in the UK and the most dynamic in transforming the industry, and industries in general," he said. "That's a swipe that is unworthy - you've got to look at the balance sheet, but also off the balance sheet too. Then there are apprenticeships - I don't know of anyone else [doing as much in the space] and we deal with a lot of companies. There are 11,000 Microsoft apprentices in the UK. How is that not supporting the economy and investing in our industry?
"Without Microsoft, I would have no business. My suppliers would have none either. People like Insight, Bytes and all the other LSPs - without Microsoft they don't exist."
Similarly, Pontus Noren, co-founder of AWS partner CloudReach Europe, told CRN that he believes there to be flaws in UKCloud's argument.
"Stones and glass houses spring to mind," he said. "UKCloud and others - where do they buy their equipment from? From Cisco, from EMC, from Huawei - a lot of which is manufactured in China and elsewhere. How many British jobs were created by buying that equipment? Sometimes you have to be careful when you say things like this."
Noren pointed out that UKCloud's buy British mantra is hardly surprising, given that it competes with AWS and Microsoft on that very point of differentiation.
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The big cloud debate: US giants vs UK providers
Global cloud giants have gone to great efforts to talk up their UK credentials in recent months, but British provider UKCloud has called them out, questioning the investments and their wider impact on the economy. Hannah Breeze navigates the debate
But expanding on Hansford's blog, UKCloud's commercial director Nicky Stewart said that the company's view on the market is "absolutely not" self-serving, but has the country in mind.
"UKCloud is all about doing the right thing, and we've always tried to do the right thing by government," she said. "It's not just us that is seeing it. If you went to any small cloud provider, they would say the same thing to you."
Lawrence Jones, CEO of British datacentre provider UKFast agrees with UKCloud completely, and branded claims made by certain US giants about having UK local datacentres are just a "marketing ruse."
"They're coming up with a marketing ruse saying they're building datacentres in the UK - they're leasing small datacentres in the UK," he claimed. "UKFast owns the land, the buildings, the infrastructure, and we designed and built it ourselves. They're not doing it to that degree. We've just done a £2.3m upgrade on our datacentres on top of the £30m we're already spent. We've got world-class datacentres and the government should be using them.
"We're British taxpayers and I am proud of that, therefore, like other British taxpayers, I would much prefer if the government spent money within the UK, not with organisations who pay next to nothing in tax."
Further, Jones answered claims that even UK datacentre providers cannot buy everything British when it comes to technical equipment.
"The actual equipment is just a small amount of it, certainly for the likes of UKCloud and UKFast," he said. "The lion's share of our overheads are people. We're in the service industry and we pay huge amounts of money to our technical staff."
Privacy problems
In his blog, Hansford made further claims against his rivals, insisting that only a British provider can provide British companies the peace of mind they want, and need, when it comes to data sovereignty and privacy.
"Nothing, including Privacy Shield, EU model clauses or encryption, prevents a company being responsible for the data it holds or the regulations that apply to the data," he said. "And whatever they say, the US players are all subject to a set of intrusive US regulations that do not apply to their UK rivals. This includes the recent amendment to Rule 41 which would allow the US law enforcement agencies access to any data held by the US cloud firms.
"Also just look at the compute and storage capacity available in the new facilities opened by AWS and Azure. It is simply not enough to serve all the needs of their UK clients. Therefore, a significant number of workloads will need to be processed off shore and a significant proportion of data held there also - hardly what you'd call data residency. And even if clients are offered guaranteed data residency with all compute and storage restricted to the new UK facilities, the data is still subject to the intrusive US regulations as long as it is being handled or stored by these US firms - hardly what you'd call data sovereignty either."
"Very quickly, government might find itself back in the lock-in situation it found itself in in 2010. But only this time, it won't find itself locked into five or six providers, it will be two." - Nicky Stewart
RedPixie's Feldman strongly disagreed, and said he is convinced his partner Microsoft is a leader when it comes to privacy. He referred to a legal case last year involving Microsoft, during which a US court ruled in its favour, ruling that it did not have to hand over data to the US government which was stored abroad.
"That's a really large endorsement about how much they care about data," said Feldman.
‘Sleepwalking into oblivion'?
Another thread in UKCloud's argument against the likes of AWS and Microsoft relates the UK government, an area in which is it heavily involved, selling through public frameworks like the G-Cloud.
Back in 2010, when the coalition came to power, it kicked off an ongoing campaign to level the playing field when it came to public sector procurement, trying to break the stranglehold a few, huge tech power players had on government contracts. Long-term deals with single or few providers were not uncommon, and SMEs struggled to compete. But initiatives like the G-Cloud, caps on the value of frameworks, and an emphasis on buying cloud services, have helped to change this, and the numbers show more SMEs are winning government deals. At the moment, there are nearly 3,000 suppliers on the Digital Marketplace, 90 per cent of which are SMEs.
UKCloud, a beneficiary of this development, said that although such good progress has been made, the government is at risk of blindly walking into another issue, but this time, with cloud suppliers.
"What we're seeing is a default back to two vendors - two large, global generalists," said UKCloud's Stewart. "I guess the most obvious thing, as none of us would have failed to see, the MoD is moving everything over to Azure. At the same time, Matt Hancock [digital minister] made some statement around a security initiative and there was a quote from Microsoft on [the press release] too - which raised some eyebrows. There is a real challenge here - I don't think the government has some intention to move everything over to the generalists, but it is happening through the back door.
"There is a big shortage of digital capability in the government so most of that is being bought in with contractors. And they know what they know - so they may be familiar with one cloud, but not another, so they are in their comfort zone, which is good for them, but not for government. That's what happening and we really do need to raise awareness that when you buy something, there are broader consequences of just your patch. If you continually buy from one or two providers - which do not adhere to the principals of open data and source - very quickly, government might find itself back in the lock-in situation it found itself in in 2010. But only this time, it won't find itself locked into five or six providers, it will be two. So that, for us, is the bottom line issue on this. We really need to get people thinking about what's happening. It needs to come onto everyone's radar. They're sleepwalking into a duopoly. It's a big issue."
The Cabinet Office did not respond when contacted by CRN for comment.