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

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The promise of cloud computing was to expand access to the digital world worldwide, but for startups in developing countries, that promise has largely gone unfulfilled. Centralized cloud services managed and controlled by tech giants like Amazon Web Services (AWS), Microsoft Azure, and Google Cloud often create as many barriers to innovation as opportunities in emerging economies.

While these services initially accelerated the development of digital connectivity in developed countries, their centralized models have come 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 unintentionally widening the digital divide as progress accelerates, leaving many promising young minds and startups in developing countries struggling to compete on the global stage.

Technological dependency and operational risks

Technological dependency and operational risks are the two most critical issues facing users in developing countries. In the Asia-Pacific region, AWS, Azure, and Google Cloud dominate with a combined market share of 66%. 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 complete outages.

Recent high-profile outages have tested the resilience of cloud infrastructure. In December 2021, AWS experienced a significant outage that affected critical services like EC2, S3, RDS, and Lambda, and lasted for hours. The impact was extensive, causing issues with major platforms like Netflix, Disney Plus, and Ticketmaster, as well as Amazon services like Prime Music, Ring doorbells, and parts of Amazon.com. For small businesses and startups, especially in developing countries, such outages can pose significant challenges, potentially leading to financial losses and impacting customer confidence. Another major AWS outage in 2023 shut down news organizations like the Boston Globe and utilities like the New York Metropolitan Transportation Authority for hours. These incidents highlight the ongoing importance of robust infrastructure and comprehensive contingency planning in our increasingly cloud-dependent world.

Cost barriers

Cost barriers are another significant challenge. Startups typically have a higher cloud-to-IT spend ratio than larger organizations, making cloud costs disproportionately burdensome. This limits their ability to scale, develop products, and innovate solutions. An illustrative cost comparison for real-time communication (RTC) services shows that AWS would cost around $30,458 per year for a scenario where 10 participants transfer 31.5 GB per hour. In comparison, decentralized solutions can reduce this to just $590 per year—a potential 97% savings. Such significant cost differences could be a game-changer for resource-constrained startups in emerging economies.

Perhaps the most fundamental problem 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, especially for real-time services like video streaming or financial transactions. This performance gap puts local startups at a competitive disadvantage compared to businesses in regions closer to large cloud infrastructure.

Developing world

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

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

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

Ayush Ranjan

Ayush Ranjan founded Huddle01 in September 2020 and currently serves as its CEO. His work focuses on building the first decentralized communications network that aims to make WebRTC and real-time communications more accessible. Leveraging his background in growth strategies and product development, Ranjan leads Huddle01’s efforts to create innovative solutions for users to access the best audio and video conferencing worldwide.