Cloud computing promised to increase access to digital content across the world, but this promise has not been fulfilled for many startups in developing nations. Cloud services centralized and controlled by tech giants such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud often present as many barriers as opportunities to innovation in emerging economies.
These services were initially instrumental in accelerating the growth of digital connectivity among developed nations. However, their centralized approach has become a significant barrier to sustainable growth and innovation. Cloud computing, with its technological dependence, prohibitive costs, and physical infrastructure limitations is widening the gap between developed and developing nations.
Technology dependency and operational risk
In developing countries, users are faced with two major issues: technological dependency and operational risk. AWS, Azure and Google Cloud have a combined market share of 66% in the Asia-Pacific region. This concentration makes developing economies dependent on foreign-owned infrastructure. It limits local innovation, and exposes businesses to service disruptions from latency problems to outages.
Recent high-profile failures have put cloud infrastructure to the test. AWS suffered a major disruption in December 2021 that affected critical services such as EC2, S3, RDS and Lambda. The outage lasted several hours. It affected major platforms like Netflix, Disney Plus and Ticketmaster as well as Amazon services such as Prime Music, Ring doorbells and parts of Amazon.com. Such outages, especially in developing countries, can be a serious challenge for small businesses, startups and other companies. They may result in financial losses or damage customer trust. Another notable AWS outage in 2023 brought down public services like the New York Metropolitan Transportation Authority and news outlets such as Boston Globe for several hours. These events highlight the importance of a robust infrastructure, and contingency plans in our increasingly cloud-dependent society.
Cost barriers
Another significant obstacle is the cost. Cloud costs are disproportionately high for startups, who typically spend more on cloud computing than large enterprises. It limits their ability for them to innovate, scale and develop new products. AWS costs about $30,458 per year for 10 participants who transfer 31.5 GB of data each hour. Decentralized solutions, on the other hand, could lower this cost to only $590 per annum – a possible 97% savings. These stark differences in cost can have a dramatic impact on startups, especially those from emerging economies.
The most important issue for startups in developing nations is the fact that cloud services are centralized. This poses significant operational challenges. The high latency caused by geographically distant data centres can have a negative impact on application performance. This is especially true for services that are in real time, such as video streaming and financial transactions. This performance gap places local startups at a disadvantage in comparison to businesses located in regions that are closer to major cloud infrastructure.
The developing world
To address these issues, we must rethink the way in which cloud computing is used in developing countries. Peer-to-peer solutions offer promising alternatives. These technologies spread data and processing over many nodes to reduce reliance on a single provider or country’s infrastructure.
These solutions, by reducing the siloed nature of the existing servers, and increasing the geographical distribution of data centers in particular underrepresented areas, can reduce communication costs and enhance user experience while improving data security.
Although centralized cloud services are useful, they do not fit all, especially for developing countries. Decentralized technologies are promising to remove the barriers which currently limit the potential for startups in developing countries. These solutions, which could save up to 90 percent on costs, could make high-quality communication infrastructure more accessible. Cloud computing is a promising future for developing economies. While there are challenges to be overcome in terms of reliability, scalability and regulatory compliance, it promises an innovative and more equitable digital ecosystem.
