What would disprove this analysis? (Criterion 1)

Companies with single-cloud strategies show lower total infrastructure costs than multi-cloud or hybrid approaches over 5 years

What would disprove this analysis? (Criterion 2)

Major cloud provider outages affect fewer than 1% of dependent companies' operations

What would disprove this analysis? (Criterion 3)

Cloud provider pricing remains stable or decreases for locked-in customers over 5-year contract periods

When should you avoid cloud concentration risk?

Your business cannot tolerate any single provider having outage-level control over your operations. Your cloud spend already exceeds 20% of revenue and is growing faster

What are alternatives?

Multi-cloud strategy: Distribute workloads across providers — higher complexity but lower concentration risk. Hybrid cloud: Keep sensitive or high-volume workloads on-premise, use cloud for burst and non-critical. Cloud-agnostic stack: Kubernetes + Terraform + open-source databases — portable by design, higher initial effort

Catalog

I001

Infrastructure

Cloud Concentration Risk

HIGH(82%)

February 2026

4 sources

Context

Organizations migrate to cloud providers (AWS, Azure, GCP) for agility, scalability, and cost efficiency. The migration works. Then dependency deepens. Proprietary services, managed databases, serverless functions, and cloud-native tooling create lock-in that makes switching providers a multi-year, multi-million dollar project. When the provider has an outage, your business has an outage. When they raise prices, you pay. The cloud promised freedom from infrastructure. It delivered a different kind of dependency.

Hypothesis

What people believe

“Cloud migration reduces infrastructure risk and cost while increasing operational flexibility.”

Actual Chain

→

Teams adopt provider-specific services for speed(70-80% of workloads use proprietary services within 3 years)

└

Lambda/Cloud Functions, DynamoDB, Cosmos DB — no portable equivalents

└

IAM, networking, and monitoring deeply coupled to provider

└

Engineers develop provider-specific skills, not portable cloud skills

→

Switching costs become prohibitive(Migration estimated at 2-4 years and $5-50M for mid-size companies)

└

Provider knows you can't leave — pricing leverage shifts permanently

└

Annual price increases of 5-15% become non-negotiable

└

Contract negotiations become adversarial — you have no BATNA

→

Single points of failure at provider level(Major outages affect thousands of companies simultaneously)

└

us-east-1 outage takes down half the internet

└

Your DR plan assumes the provider works — it doesn't protect against provider failure

└

Correlated failure: your app, your monitoring, your alerting all go down together

→

Cloud costs grow faster than revenue(Cloud spend grows 20-30% annually vs 10-15% revenue growth)

└

Repatriation becomes attractive but lock-in makes it nearly impossible

└

FinOps teams created to manage costs — adding headcount to save on infrastructure

Impact

Metric	Before	After	Delta
Proprietary service adoption	Minimal	70-80% of workloads	+75%
Provider switching cost	Moderate	$5-50M+ and 2-4 years	Prohibitive
Annual cloud cost growth	Projected 10-15%	Actual 20-30%	+100% over projection
Outage blast radius	Single service	Entire infrastructure	Correlated failure

Navigation

Don't If

•Your business cannot tolerate any single provider having outage-level control over your operations
•Your cloud spend already exceeds 20% of revenue and is growing faster

If You Must

1.Use portable abstractions (Kubernetes, Terraform, PostgreSQL) over proprietary services where possible
2.Maintain a cloud exit plan — document what it would take to migrate, even if you never do
3.Negotiate multi-year contracts with price caps and egress fee waivers
4.Run critical workloads across at least two availability zones, ideally two regions

Alternatives

Multi-cloud strategy — Distribute workloads across providers — higher complexity but lower concentration risk
Hybrid cloud — Keep sensitive or high-volume workloads on-premise, use cloud for burst and non-critical
Cloud-agnostic stack — Kubernetes + Terraform + open-source databases — portable by design, higher initial effort

Falsifiability

This analysis is wrong if:

Companies with single-cloud strategies show lower total infrastructure costs than multi-cloud or hybrid approaches over 5 years
Major cloud provider outages affect fewer than 1% of dependent companies' operations
Cloud provider pricing remains stable or decreases for locked-in customers over 5-year contract periods

Sources

1.
Gartner: Cloud Concentration Risk Report
60% of enterprises identify single-cloud dependency as a top-5 technology risk
2.
Andreessen Horowitz: The Cost of Cloud
Cloud costs consume 50%+ of revenue for many SaaS companies, repatriation could save 30-50%
3.
AWS us-east-1 Outage Post-Mortem (2021)
Single region outage cascaded across thousands of companies including major SaaS providers
4.
Flexera State of the Cloud Report 2024
Cloud waste estimated at 28% of total spend, cost management is top cloud challenge

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