June 28, 2023
Good afternoon ... Hope you're having a great recess. While we wait for Congress to return, we figured it's a good time to catch up on some FTC news you need to know.
1 big thing: FTC wades into the cloud computing wars
Illustration: Gabriella Turrisi/Axios
Given the chance to comment on the state of cloud computing competition before the FTC, leading tech platforms had their knives out, Ashley reports.
Driving the news: The FTC had sought comment about the "competitive dynamics" and data security of cloud computing, an exploding industry in which top tech platforms are competing for customers.
- A snapshot of comments filed with the agency, which closed its comment period June 21, illustrates specific areas of tension.
- Common complaints focosed on the business practices of leading providers Microsoft Azure and Amazon Web Services.
- Pro-consumer groups also conveyed a sense that cloud companies are locking customers into pricey contracts with anticompetitive tactics.
Why it matters: Regulation and litigation around Big Tech competition have been playing out for more than a decade with lawsuits and pending cases across the world involving social media platforms, search engines and e-commerce sites.
- Cloud is poised to be the next big venue for industry infighting and competition tension as companies vie for business.
Be smart: Cloud competition is a new frontier without many rules, and this especially aggressive FTC, helmed by Democrat Lina Khan, won't hesitate to propose new ones depending on the feedback it gets.
The big picture: Companies including Microsoft, Google, Amazon and Oracle all want to help companies move their operations to the cloud as legacy on-site data warehousing becomes obsolete.
- They compete with one another on price and offerings and all boast an ability to interoperate, but they all work a little differently.
- End-user spending on cloud services is projected to reach nearly $600 billion in 2023, per research from Gartner, with spending buoyed by investments in AI.
What they're saying: Tech companies with cloud offerings and their trade groups write that the cloud computing industry is dynamic, with prices being kept low by "intense and increasing" competition.
- Others say cloud is just another area of the tech market for the biggest companies to dominate.
Details: One notable standoff is between Microsoft and Google.
- "The cloud industry is currently at an inflection point in the contest between legacy software constructs — restrictive licensing, closed ecosystems, and creating anticompetitive barriers — and the cloud’s original promise and potential," Google writes in its comment.
- Google alleges that Microsoft uses its dominance in software products like Microsoft Word to "unfairly leverage that dominance in the nascent cloud market," extensively detailing what it sees as unfair behavior from Microsoft.
Zoom in: Google, currently at odds with antitrust regulators itself over its search and advertising practices, writes: "Microsoft’s complex web of licensing restrictions prevents customers ... from choosing any other cloud provider at the time of migration into the cloud."
- Other companies, such as Oracle, take shots at leader AWS for "egress [data transfer] fees," accusing Amazon of "charging irrationally high rates to leave."
- "Since AWS pioneered cloud computing in 2006, more and more companies are offering these on-demand IT services, and competition among cloud providers and other IT service providers continues to drive better products and lower prices for customers," an AWS spokesperson told Axios.
The other side: "We have made changes to our cloud licensing terms to address licensing concerns and provide more opportunity for cloud providers," a Microsoft spokesperson told Axios.
- "Worldwide, more than 100 cloud providers have already taken advantage of these changes."
2. 1 fun thing: Lunch with Gerry Petrella
Photo: Ashley Gold/Axios
Welcome to our recess edition of lunch with an insider! Ashley and Maria sat down at Cafe Fili with Gerry Petrella, Microsoft's new-ish general manager for U.S. public policy.
- Before joining Microsoft, Petrella served as Senate Majority Leader Chuck Schumer's policy director. He led Senate Democrats in negotiating the U.S. Innovation and Competition Act, the bipartisan infrastructure deal and other big legislative packages.
- We didn't talk about the cloud in this interview! Just fun stuff.
Most misunderstood thing about working on the Hill: How arduous the process in the Senate is from a parliamentary and procedural point of view. People are just like, "Oh, that bill just came out of committee, why don't you just do it, do it right now, bring it to the floor," and it's not that easy.
- It's like putting together a road map, and we really pushed the envelope in the last Congress to the point where I think we nearly killed everyone. The parliamentarian, the committee staff, myself included. And we still weren't able to get to everything.
- I always get into arguments with friends and family back home about this — they just think all politicians are corrupt, [but] it's like we literally don't make money. We all could make more money doing other things.
- The people there, especially the staffers, they're so misunderstood. They are doing it for the right reasons whether you agree with them or not.
- You know, I disagree with my Republican friends all the time, but they're all good people trying to do good things for the country.
What's the most annoying thing about the Hill now that you're in the private sector? Now that I'm on the other side of this and learning all the great things that we're doing as a company, the complexity of it, I probably wouldn't have appreciated in my old job. It's really difficult.
- Also there's so many requests for meetings. There was at my old job too, but I could kind of just say no to people back then. Can't say no to people now.
Do you have any hobbies? I love baseball. I'm a huge sports fan. The Mets are my passion — it's character building to never win.
- I'm a diehard Mets, Giants, Knicks, and Islanders fan. I love bike riding and working out. The city has great trails. I do the Anacostia trail quite a bit.
- The H Street Corridor doesn't get a lot of respect around town, but it's got a lot of great restaurants. ... I gotta be honest, the sauce [at L'Ardente] is really close to what my grandma made.
✅ Thank you for reading Axios Pro Policy, and thanks to editors Chuck McCutcheon and David Nather and copy editor Brad Bonhall.
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