Cloud concentration can leave an organization exposed to a shared outage, weaker bargaining power, and expensive or impractical exits. Using several providers may reduce reliance on one supplier, but it also adds operational and security complexity. IT leaders need to decide which workloads require portability or provider diversity—and where a single-provider design is acceptable only with a funded, testable exit plan.
What cloud concentration means—and why it matters
Cloud concentration is a dependency on one or a small number of providers for critical workloads or services. The concern is not simply that a provider is large: many organizations may rely on the same provider, so a serious disruption can affect multiple customers and connected services at once.
The Reserve Bank of Australia (RBA) reported that Amazon, Microsoft and Google together accounted for almost two-thirds of the global market for cloud infrastructure and platform services in 2023. Its April 2024 bulletin, citing Saarinen (2023), gives the following shares:
| Provider or category | Share in 2023 |
|---|---|
| Amazon | 32% |
| Microsoft | 23% |
| 10% | |
| Alibaba | 4% |
| IBM | 3% |
| Other providers | 28% |
These are global figures for infrastructure and platform services in 2023—not current shares for every cloud category, country or region. The RBA applies the issue to clearing and settlement facilities and the wider financial industry, warning that “an outage at a service provider could cause widespread disruption to the financial system.” Read the RBA’s April 2024 analysis.
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The Bank for International Settlements’ Financial Stability Institute (BIS FSI) explains why the concern can extend beyond an individual company: a major disruption at a provider hosting critical financial services could have systemic implications. Firm-by-firm third-party risk reviews may not capture the cross-sector and cross-border effects of many firms depending on the same provider. The BIS FSI examines cloud oversight in the financial sector.
What are the harmful effects of cloud concentration?
Shared outages can disrupt multiple services
A provider disruption can affect more than one application if the organization’s critical systems—or the services its vendors rely on—share the same cloud infrastructure or management dependencies. In financial services, that shared exposure can reach participants and connected services, rather than remaining an isolated customer incident. A cloud provider may offer resilience features, but the customer still needs to assess whether its service commitments and architecture meet the workload’s criticality.
Lock-in can weaken choice and negotiating power
When switching is costly, technically difficult or restricted by software licenses, a customer may have fewer realistic alternatives at renewal or when service needs change. The UK government’s cloud-hosting guidance identifies reduced negotiating leverage and lock-in as commercial risks, while also recognizing that an organization may deliberately choose a provider’s native capabilities or agility. Its guidance treats provider diversity, portability and accepted lock-in as choices to make consciously. See the UK government’s cloud-hosting strategy guidance.
Competition authorities are also examining market structure and switching barriers. The OECD’s May 2025 policy paper considers concentration, entry barriers and interoperability challenges in cloud services. The UK Competition and Markets Authority’s cloud investigation page lists final decision materials dated 1 August 2025, along with analyses covering switching, multi-cloud, egress fees, licensing and barriers to entry. Read the OECD paper and view the CMA investigation materials.
In the United States, a November 2024 Government Accountability Office report found that restrictive software licensing practices affected cloud-service costs or provider choices at five agencies it interviewed. Examples included licensing or vendor practices that encouraged use of the supplier’s own cloud, and a contractor charging an agency to regain ownership of data at contract end. These are examples from selected federal agencies, not an estimate of how often the same practices affect all public- or private-sector customers. Read the GAO report.
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In the European Union, the European Commission announced on 25 June 2026 a preliminary position that Amazon’s and Microsoft’s market-leading cloud services should be designated under the Digital Markets Act, citing apparent lock-in effects and high switching costs. This was a preliminary position, not a final designation. See the Commission’s announcement.
Provider reliance does not transfer all responsibility
Public cloud can support availability, resilience and security, but customers may have limited visibility into provider operations or subcontractors. A provider’s service levels may also be unsuitable for a particular critical service. The RBA cautions that handing risk management entirely to a supplier can leave customer-managed technology risks unattended. Moving workloads or returning them to on-premises infrastructure can itself severely disrupt critical services if the transition is not effectively planned and funded. The RBA discusses outsourcing and concentration risks.
Does multi-cloud reduce cloud concentration risk?
It can diversify provider dependency, but multi-cloud is not an automatic resilience guarantee. A second provider helps only if the relevant workloads can operate or recover there, the dependencies are sufficiently independent, and the organization can manage both environments during normal operations and an incident.
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|---|---|---|
| Single provider | One main provider environment to operate; access to provider-native services may support the chosen design. | Greater reliance on that provider and possible switching barriers. Define what an exit would require. |
| Selective multi-cloud | Can reduce reliance on one provider for selected workloads or recovery paths. | Cross-provider operations, security, staffing and governance become more complex; confirm the second environment is usable for recovery. |
| Portable or hybrid design | May make it easier to move workloads or use more than one environment. | Portability and hybrid operation require design and ongoing effort; weigh them against the native capabilities or performance being given up. |
AWS Prescriptive Guidance advises that multiple providers should add business value that outweighs their costs and challenges; it warns that adopting several providers concurrently can introduce complexity. That is provider guidance, not independent comparative evidence. NIST’s Multi-Cloud Architecture Challenges report, an initial public draft published 21 August 2026, identifies differences in native services, staffing logistics and the difficulty of centralizing security across provider boundaries. Neither source establishes a universal resilience benefit that outweighs the added cost in every enterprise. Read AWS’s multi-cloud recommendations and view the NIST draft.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How IT leaders can assess and manage concentration risk
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Map critical workloads and inherited dependencies
For each critical service, record the cloud provider and region, applications, data stores, identity and access services, management planes, and important third-party components. Include dependencies used by vendors: an application supplied by a third party can still inherit the provider concentration risk beneath it. Note which services depend on the same provider so shared exposure is visible.
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Choose a resilience approach workload by workload
Decide whether each workload needs a portable design, a recovery path with a second provider, or a deliberate reliance on one provider’s native capabilities. Compare recovery expectations and correlated-failure exposure with performance, migration and egress costs, licensing and exit rights, security and compliance consistency, staffing demands, and geographic or data-residency needs. Record why the chosen trade-off is acceptable.
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Review contract and software-license terms before a crisis
Check who owns the data and how it can be retrieved, what fees apply to transfer or termination, whether transition assistance is included, and what rights the organization has to use third-party software on alternative infrastructure. Assign an owner to identify, assess and mitigate restrictive licensing effects. The GAO’s agency examples show why software rights and end-of-contract responsibilities should be explicit rather than assumed.
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Write an exit plan with a destination and trigger
Specify the workloads in scope, the conditions that would trigger an exit, the destination environment, success criteria, refactoring required, accountable owners, needed skills and resources, contractual rights, and data-residency constraints. Estimate the time and funding needed to move or restore service; do not treat an uncosted intention to migrate as an executable plan. AWS’s exit-strategy guidance provides a list of planning components. See AWS guidance on evaluating exit-strategy requirements.
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Test the plan and maintain customer-side controls
Exercise the exit or recovery assumptions through tabletop scenarios or technical gamedays. Test whether data can be retrieved, software can legally run at the destination, staff can operate the workload, and recovery meets its success criteria. Separately, continue to validate provider risk management and service commitments against workload needs, account for limits in subcontractor visibility, and maintain controls for risks the customer owns.
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