https://www.economist.com/leaders/2020/10/22/is-tech-getting-more-competitive

Read the article Is tech getting more competitive? In cloud computing, at least, the contest is fierce 10/22/20 The Economist. Explain in detail how the contents of the article relate to the economic concepts of pure competition, monopoly, productive and allocative efficiency and additional relevant principles. Remember, answers to this question should be written in third person.

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Is tech getting more competitive? In cloud computing, at least, the contest is fierce 10/22/20 The Economist

The term "big tech" is often used as shorthand to describe the small group of digital firms that tower over the 21st-century economy. Together, they make up over a fifth of America's stockmarket. But behind that phrase a lot is going on. As business lines have become monopolised, it has become commonplace to complain that tech firms are offering consumers a toxic deal. But in a growing number of areas the picture is healthier.

The largest tech companies have expanded into a dizzying range of industries. Amazon faces credible ecommerce rivals in the form of Walmart and Shopify. Video-streaming is a fight for supremacy between half a dozen firms. And cloud computing has become a fiercely contested market, too, as our analysis of the adventures of Microsoft shows (see Briefing). Its experience is a reminder of the benign power of competition?and of how governments should be surgical about taming tech.

Cloud computing took off about 15 years ago, as businesses began to outsource their web-hosting, data centres, core computer systems and many applications to a few big providers, particularly the pioneer aws, run by Amazon. The pandemic has shown just how critical the cloud has become. Many of the economy's main functions depend on it, including a wide range of e-commerce sites and applications that let you work from home. The scale of this activity is huge; approaching 10% of all technology spending is on the cloud. So are the sums of money being invested. Perhaps $40bn is being ploughed this year into data centres and other physical gear by aws and others.

The cloud brings obvious benefits. The firms using it replace lumpy capital expenditure on rickety bespoke it with a variable payment for a service that can easily expand its capacity as needed. That is one reason firms such as Zoom have been able to grow so fast during the lockdown. Having many users for each piece of infrastructure means they are put to work more efficiently. The cloud has also been seen as an example of the internet's fragmentation. Alibaba's and Tencent's cloud arms dominate in China and are making some inroads elsewhere in Asia. Europe is so anxious about American firms that it has launched a state-backed rival, called Gaia-x. Businesses in poor countries may struggle for access to the cloud, slowing their development.

The biggest fear has been of a cloud monopoly. Here the news is encouraging. aws remains the cloud's biggest firm, but Microsoft, the original antitrust bad boy, is putting up a fierce fight with its own service, Azure, and hopes to get more of its Office and Windows customers to use it for the cloud, too. Alphabet is also putting its cloud forward. On October 8th ibm said it would spin off part of its services business to focus on the "hybrid-cloud", which marries old-fashioned on-site work with the cloud. Likewise Oracle's proposed bid for TikTok, a social-media firm, is in part an effort to secure an anchorcustomer for its nascent cloud operation. Regulators need to be vigilant to ensure that cloud firms are not abusing other companies' data, erecting unfair barriers to entry or misusing their dominance.

year into data centres and other physical gear by aws and others. Microsoft Revenue, 2020 financial year, $bn Windows Gaming LinkedIn O 30 60 90 120 150 Server Office products products Other Includes cloud services The Economist The cloud brings obvious benefits. The firms using it replace lumpy capital expenditure on rickety bespoke it with a variable payment for a service that can easily expand its capacity as needed. That is one