Amazon Web Services (AWS) is seeing unexpected competition from on-premises infrastructure, a shift from its earlier belief that all workloads would eventually move to the cloud. In a recent statement to the UK’s Competition and Markets Authority (CMA), AWS admitted that some customers are moving their data back to private data centers. This trend, known as “cloud repatriation,” highlights the need for more control over costs, security, and data.
Cloud repatriation is becoming more common as businesses seek financial stability and customization. For example, project management firm 37Signals chose to return to on-prem infrastructure after receiving a $3.2 million cloud bill. They saved $1 million in the first year. AWS is now acknowledging that on-prem is an attractive option for certain businesses.
AWS noted that 29% of UK organizations switching from cloud providers chose to return to on-prem solutions. The company argues that this shows the flexibility businesses have when it comes to their IT infrastructure. Customers often move back to on-prem to adjust finances, gain better control over technology, and enhance security.
The CMA is investigating whether major cloud providers limit customer choices or create vendor lock-in. One key issue is AWS’s Committed Spend Agreements (CSAs), which offer discounts for long-term commitments. These agreements could discourage customers from switching providers, raising concerns about competition.
As the CMA’s investigation progresses, AWS’s acknowledgment of cloud repatriation could signal a broader shift in the industry. More businesses are now weighing the benefits of private IT versus cloud services. The final CMA report, due in April 2025, will likely have a lasting impact on cloud strategies and regulations.
