A global outage at Amazon Web Services (AWS) on Monday has highlighted the UK government's significant dependence on the tech giant's cloud computing services, with figures showing it has awarded £1.7bn in contracts since 2016. The disruption affected thousands of businesses worldwide, including UK government departments, raising concerns about concentration risk.
According to data from public procurement intelligence firm Tussell, AWS has won 189 UK government contracts worth £1.7bn since 2016, invoicing about £1.4bn. Currently, 35 public sector authorities use AWS across 41 contracts valued at £1.1bn, including key departments such as the Home Office, DWP, HMRC, Ministry of Justice, Cabinet Office, and Defra.
Tim Wright, a technology partner at law firm Fladgate, described the exposure as 'very significant' and noted the irony given that regulators like the Financial Conduct Authority (FCA) and Prudential Regulation Authority (PRA) have repeatedly warned about the dangers of concentration risk in cloud services. He said recent moves by HM Treasury, the PRA, and FCA to oversee 'critical third parties' aim to address such risks, but the government's own reliance contradicts resilience principles.
The House of Commons Treasury Committee has written to Economic Secretary Lucy Rigby questioning why Amazon has not been designated a 'critical third party' to the UK's financial services sector, which would subject it to regulatory oversight. Committee chair Meg Hillier noted that Amazon had told the committee its financial services customers use AWS to support resilience.
More than 2,000 companies worldwide were affected by the outage, with 1 million reports in the UK. Among government contracts, only HMRC reported being affected, saying customers had problems accessing online services. Services were mostly restored within hours, with Amazon stating all cloud services had returned to normal by Monday evening.
Unions have also criticised the government's relationship with Amazon, citing poor working conditions in its warehouses. Andy Prendergast of the GMB union called it 'a disgrace' for Amazon to receive nearly £2bn of public money given its track record on worker treatment. Amazon did not comment on the outage, but a spokesperson for its fulfilment centres said the 'vast majority' of ambulance callouts were not work-related.
