The Skies Look Gloomy for Big Tech’s Cloud Ambitions
A sector that was seen as Silicon Valley’s key to continued profits hits its first real setback.
For a while, cloud computing was Big Tech’s cash machine. As the digital economy grew, companies across the economy developed a greater need for flexible data storage and processing power. This created an opportunity for tech companies to rent out such capacity. The pandemic accelerated the trend, creating years of good news for Alphabet, Amazon and Microsoft.
Their cloud computing businesses are still getting bigger, but not as quickly as they once were. The rate of growth for each of the three market leaders in the fourth quarter fell at least 10 percentage points from the previous nine months. That’s partially because a shaky economy means “every dollar is being inspected” at existing customers, says Rikin Shah, founder and chief executive officer of Slower.ai, which helps companies migrate to the cloud. Most cloud infrastructure is priced based on usage—so customers can lower their bills by simply using less. Amazon.com Inc. Chief Financial Officer Brian Olsavsky said on a Feb. 2 earnings call that mortgage lending and crypto trading were two examples of the many slowing industries dragging cloud growth.