A slowing in Amazon’s Web Services’ astronomical growth rate of recent years has, according to some commentators, made it look as though Microsoft and Google have more of a chance of stealing at least some of its cloud market share.

Speculation Fuelled

This latest round of speculation about whether the two leaders of the pack chasing a bigger share of the enterprise cloud market has been triggered by the release and the trumpeting of the healthy financial figures by all three.

At the heart of the speculation that Microsoft and Google may be gaining a little on AWS (which is, realistically, still in a league of its own) is the assumption that a growth rate that big, combined with a huge number of customers (surely) can’t be sustainable.

Drivers

Major drivers for growth of in the enterprise cloud market have been the need to get way from the cost and risk of data centres, the attractiveness in the flexibility (and security) that the infrastructure as a service (IaaS) cloud model offers.

Comparing The Three

Few analysts would doubt the complete dominance of AWS, and an accurate, side-by-side comparison of the latest figures is hampered by the fact that Google does not separate out the contribution that the cloud makes to its overall financial results. Nevertheless, it is possible to compare some key aspects of AWS, Google and Microsoft’s position in the IaaS market such as:

• AWS went from Q2 results (in 2015) showing an 81% growth rate on the previous year (and $1.82bn revenue), to a slowing and declining year-on-year revenue growth rate of 78% in Q3 2015, down to 43% in its latest set of financial results (Q1 2017), published on 27 April. 43% is still a huge rate of growth, and is far higher than traditional infrastructure company growth rates. It is also important to bear in mind that AWS is a much bigger organisation than it was two years ago (when it started releasing its cloud figures), and expecting anything like an 80% growth rate for several consecutive years may be unrealistic. The size of the revenues associated with the growth rate is huge, as is the AWS market share.
• In comparison, Alphabet released its Q1 results on 27 April (Google’s parent company). These showed $24.8bn in revenue during the three months to 31 March – up 22% on the previous year.
• The revenue for Microsoft’s public cloud platform Azure was up 93% in Q3 (published 27 April). Its Commercial Cloud division reported a 52% increase in year-on-year business and $15.2bn of revenue.

The key point is, therefore, that even though Microsoft and Google are displaying impressive and rising growth rates in their cloud businesses, a declining but still good growth rate for a company such as AWS that already has huge market share, economies of scale and the resulting pass-along lower pricing, makes realistic challenges to its dominance look unlikely for the near future.

Google Trying To Be More Attractive To Enterprises

Alphabet (Google) has reported that its improved growth rate figures in the cloud business are the result of its two-year-long efforts to make its cloud business more enterprise-friendly.

What Does This Mean For Your Business?

Information Services Group (ISG) figures, for example, showed that in 2016, traditional business outsourcing contracts were being replaced by cloud-based services to the point where spending on cloud based contracts increased by 33% compared to 2015. Many more businesses are realising that new kinds of cloud-based contracts offer many different and attractive models such as software as a service (SaaS), infrastructure as a service (IaaS) and platform as a service (PaaS), all of which essentially provide flexibility / scalability, easier management and upgrades, and lower costs. With greater competition between AWS, Google, Microsoft, and other players in the cloud market, enterprises may enjoy even lower cloud costs and improved service offerings in the future.

Virgin Media Business have announced that they are offering a broadband package to SMEs that that gives broadband speeds that are more than four times faster than the equivalent speeds offered by its rivals.

Voom Gloom For Rivals

From 2nd May, the new fibre broadband called Voom Fibre, will offer SMEs the chance to benefit from a broadband speed of 350Mbps. In reality, although many of Virgin’s customers will be able to access the full 350Mbps, most customers will get the benefit of at least 200Mbps.

Nevertheless, this appears to compare very favourably with the top broadband speed of 76Mbps offered by rivals BT, Sky and TalkTalk (where customers are in areas where those speeds are possible).

Three Price Plans + Bolt-On Services

Voom Fibre customers can choose from 3 packages with different upload speeds:

• A £30 per month package with upload speeds of 7Mbps (which can be increased to…)
• A £40 per month package with upload speeds of 15Mbps
• A £50 per month package with upload speeds of 20Mbps.

Vital Says MD

Peter Kelly, the managing director of Virgin Media Business has said that offering SMEs access to this kind of broadband speed removes a long-standing barrier, and enables them to be more able to compete effectively in “this evolving digital economy”.

Mr Kelly also pitched the introduction of the service as “a huge challenge to the market to do better”, and urged competitors to try and match the speed of Virgin’s offering to help small businesses, and therefore the wider UK economy.

Help The Economy?

FSB figures show that 99% of all 5.5. million UK private sector businesses (2016 figures) could be described as SMEs. Virgin’s own commissioned research showed that if the UK’s digital potential was fulfilled (which includes faster broadband services) the UK’s GDP could increase by more than £90bn in GDP over two years.

More Bad News For Broadband Competitors

The introduction of Voom is one part of a series of announcements that are likely to have been bad news to competitors. Last month Virgin announced that its standard basic broadband speed offering would be 100Mbps (up from 50Mbps). Virgin announced that it was opening up its top-tier 300Mbps service.

What Does This Mean For Your Business?

If you are an SME and if you are in an area where it is possible to get the full benefits of Voom, this is likely to be very good news, and may even tempt you to switch from your existing provider. Fast broadband speeds can save time, and open up new possibilities for small businesses which could translate into sources of competitive advantage.

The newly released Internet advertising industry’s annual report appears to show a continued duopoly-like dominance by Google and Facebook as the gatekeepers of the growth in new advertising spend.

Traced Back

The report highlights the extent to which Google and Facebook are taking most of the new money at the expense of the rest of the smaller players in the digital ad business. The real growth of the so-called duopoly situation goes back to 2015 where US venture capital fund Kleiner Perkins Caufield & Byers noted that the two tech giants accounted for 75 per cent of all new online ad spending.

New Figures

A new estimate of Google and Facebook’s dominance in handling the lion’s share of gross digital ad spending puts it at 77% plus.

In-Line With Predictions

This appears to be broadly in line with eMarketer predictions from earlier in the year that showed Google as looking likely to take business from Yahoo and Microsoft Bing, and expand its share to $28.6bn (nearly 78 per cent) of the US market.

Consumers’ increasing use of mobile search on their smartphones is believed to be one of the main drivers of growth in ad spend handling for Google. The share of the total digital ad market spend that can be attributed to just Google is now thought to be nearly 41%.

Facebook

Despite being grouped in the ‘duopoly’ with Google, Facebook has actually taken share from Google, along with Yahoo and Twitter. eMarketer figures put Facebook’s share of the total digital ad market this year at over 20 per cent. This has been helped to a significant extent by photo-sharing app Instagram.

Facebook’s focus on more use of video on its own platform and Instagram are believed to be key drivers of this growth.

Low Share

Those with a (perhaps surprisingly) small share of the mobile ad spending market are Snapchat and Twitter.

What Does This Mean For Your Business?

As a business looking to spend your advertising budget widely, the trend for customers to increasingly be using mobile search on Google for example, and being engaged by all things video (e.g. on Facebook) can be important indicators of where and how to spend advertising money. When there are a small number of large players offering advertising however, it may make it a little simpler to shop around, but it could also mean less choice of services and prices.

Details have emerged of a phishing scam which took place from 2013 until 2015, allegedly run by one 48-year-old man who claimed both Google and Facebook as victims to the tune of £77 million.

Who?

The man currently accused of running a criminal scam (that ironically claimed online security advocates and tech giants Google and Facebook as victims) is Lithuanian man Evaldas Rimasauskas. Mr. Rimasauskas is reported to be currently facing charges of wire fraud, money laundering and aggravated identity theft.

How?

It has been reported that Mr. Rimasauskas allegedly posed as an Asia-based (Taiwanese) electronics manufacturing company Quanta Computer and used phishing emails targeted at employees of the two tech giants to dupe them into wiring a total of £77 million into his account over what is believed to be a two-year period.

Phishing emails are a well-known and widely used fraudulent practice, which relies upon human error by sending emails purporting to be from reputable companies in order to induce individuals to reveal personal information, or to take other action such as wiring money to the apparent sender.

US Department of Justice (DOJ) reports show that search and social network giants Google and Facebook were likely to have been fooled to such a large degree because the company that Mr. Rimasauskas was allegedly pretending to be from (Quanta) was one which normally conducted multimillion-dollar transactions with them, and also had other tech giants such as Apple as clients.

Recent media reports of the details of the case against Mr. Rimasauskas show that he allegedly used a whole series of forged invoices, contracts and letters that had been made to look as though they had come from Quanta, and were allegedly falsely executed and signed by executives and agents of Facebook and Google.

Common

KPMG figures show that the value of (reported) fraud committed in the UK last year exceeded £1.1bn, which is part of a 55% year-on-year rise, and can be attributed to the huge growth of cybercrime.

The now all-too-common ways in which companies are duped include the hacking of company executives’ email accounts to send emails asking employees to send / wire money. Many attackers use time sensitive requests at close-of-business hours (to make if difficult for victims to check and verify), and take advantage of periods of uncertainty for staff e.g. during mergers.

Detected

It has been reported that Google eventually detected the scam and alerted the authorities. Although news of a large-scale fraud made the news earlier this year, Google and Facebook were not named as victims at the time. Both Google and Facebook are reported to have recouped the losses incurred by the fraud.

What Does This Mean For Your Business?

You could be forgiven for thinking that if Google and Facebook can fall victim to online scammers to such a degree, what chance do the rest of us have? It is important to remember, however, that phishing scams and CEO frauds of this kind rely upon human error to work. Educating and training all staff to be able to spot possible fraudulent tactics, and encouraging and empowering them to question and refer any suspicious activity can help to protect your business. Having clear systems for staff to follow, including carefully verifying new payment requests before authorising them, and continuously promoting online vigilance can be well worth the effort.