The centralized cloud: a barrier for startups in the developing world

The promise of cloud computing was to expand access to the digital world across the globe, but for startups in developing countries, this promise remains largely unfulfilled. Centralized cloud services, dominated and controlled by tech giants such as Amazon Web Services (AWS), Microsoft Azure and Google Cloud, often create as many obstacles as opportunities that inhibit innovation in emerging economies.

While these services initially accelerated the development of digital connectivity in developed countries, their centralized model has grown to pose significant challenges to sustainable growth and innovation. From technological dependency and prohibitive costs to physical infrastructure limitations, the current cloud computing paradigm is inadvertently widening the digital divide as progress accelerates, leaving many young minds and promising startups in developing countries struggling to compete on the global stage.

Technological dependence and operational risks

Technology dependency and operational risks are two of the most critical issues facing users in developing countries. In the Asia-Pacific region, AWS, Azure, and Google Cloud dominate with a set 66% market share. This concentration makes developing economies dependent on foreign-owned digital infrastructure, limiting local innovation and exposing businesses to service disruptions ranging from latency issues to outages.

Recent high-profile outages have put the resilience of cloud infrastructure to the test. In December 2021, AWS experienced A major outage affecting critical services such as EC2, S3, RDS, and Lambda for several hours. The impact was far-reaching, causing issues on major platforms such as Netflix, Disney Plus, and Ticketmaster, as well as Amazon services including Prime Music, Ring doorbells, and parts of Amazon.com. For small businesses and startups, especially in developing countries, these outages can pose serious challenges, potentially resulting in financial losses and impacting customer trust. In 2023, another notable AWS outage felled media outlets like the Boston Globe and public services like New York’s Metropolitan Transportation Authority for hours. These events underscore the continued importance of robust infrastructure and comprehensive contingency planning in our increasingly cloud-dependent world.

Cost barriers

Cost barriers present another major challenge. Startups typically have a higher ratio of cloud to IT spending than larger enterprises, making cloud costs disproportionately burdensome. This limits their ability to scale, develop products, and innovate solutions. An eye-opening cost comparison for real-time communication (RTC) services shows that for a scenario with 10 participants transferring 31.5 GB per hour, AWS would cost around $30,458 per year. In contrast, decentralized solutions could reduce this to just $590 per year – a potential saving of 97%. Such stark cost differences can be a game-changer for resource-constrained startups in emerging economies.

Perhaps the most fundamental issue is that centralized cloud services present significant operational challenges for startups in developing countries. High latency due to geographically distant data centers can severely impact application performance, particularly for real-time services such as video streaming or financial transactions. This performance gap puts local startups at a competitive disadvantage compared to companies in regions with greater proximity to primary cloud infrastructure.

The developing world

We need to rethink our approach to cloud computing in the developing world to address these challenges. Decentralized solutions using peer-to-peer networks offer promising alternatives. These technologies distribute data and processing across many nodes, reducing dependence on a single provider or a country’s infrastructure.

By breaking down the siloed architecture of existing servers and increasing the number of geographically distributed data centers, particularly in underrepresented regions, these solutions can optimize communication costs, improve overall user experience, and enhance data security.

While centralized cloud services have their place, they are not a one-size-fits-all solution, particularly for developing countries. Decentralized technologies promise to break down the barriers that currently limit the potential of startups in the developing world. With cost savings potential of up to 90%, these solutions could democratize access to high-quality communications infrastructure. While challenges of reliability, scalability, and regulatory compliance need to be addressed, the decentralized future of cloud computing in developing economies promises a more equitable and innovative digital ecosystem.