Business Technology

Thursday 23 January 2020

Predicting the future: Amazon's man with his head in the clouds

Amazon Web Services is the western world's biggest data host. Adrian Weckler asks its chief technology officer, Werner Vogels, about regulation, encryption - and what we can expect next

Cloud surfing: Amazon Web Services chief technology officer Werner Vogels
Cloud surfing: Amazon Web Services chief technology officer Werner Vogels
Amazon Web Services is, by far, the dominant western data host (stock photo)
Adrian Weckler

Adrian Weckler

Werner Vogels is coughing and sneezing. He is, he says, "sick as a dog".

The big Dutchman blames it on being caught amid "65,000 people in a confined space". In Las Vegas, where he is delivering Amazon Web Services' final 're:Invent' keynote speech as its chief technology officer, the air conditioning and closed windows don't help.

But there is no sick day available to him: his role at the giant cloud conference is pivotal.

Alongside CEO Andy Jassy, Vogels is unveiling next year's roadmap for the world's biggest cloud-hosting company. This matters as much to a small Irish retailer as it does to the giant corporations which keep their data in Amazon's humongous data centres.

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Amazon Web Services is, by far, the dominant western data host. It is no exaggeration to say it houses a bigger chunk of the internet than anyone else. If you're running a service online, there's a better-than-average change it's AWS which is hosting it.

This goes from Netflix and MyTaxi to Irish companies such as Intercom, Currencyfair and Fineos.

Its main rivals, Google and Microsoft, are far behind in market share.

So what it does, how it does it and what it is planning to do are all of keen interest to millions of businesses looking for ways of making their own online services better, faster and more flexible.

Over the four-day event, Vogels and AWS made a raft of product announcements, ranging from faster 5G services - through more localised data centres at the 'edge' - to quantum computing 'as a service'.

This is typical of an AWS event - more product and service announcements than can be processed in a single sitting. Unlike the gradual release schedule of rivals, the cloud giant gets the bulk of its new offerings out in one fell swoop.

And 're:Invent' is arguably the most important single week in Amazon's corporate calendar. For those unaware of Amazon's structure, its cloud hosting division is easily the most important, profitable part of the business. We may think of web shopping, Kindles and online movies when discussing Amazon, but the engine of the company is its cloud business.

As the firm's CTO, Vogels holds some special responsibilities in ensuring things run smoothly.

But on the broader question of AWS's dominance, does he think it is healthy for the bulk of the world's online hosting infrastructure to be controlled by two or three companies, of which AWS is the biggest?

"I think it's going to be more than a handful of companies successful on a global scale," he says. "It's never going to be a winner-takes-all market. There's also room for local providers and smaller businesses in this space.

"Even though there may be more of a focus on AWS, I do think the complete industry is growing in that particular sense."

But is it likely to attract regulatory attention because of the seminal importance of the services being provided?

"We spend a lot of time on education there," he says. "The one thing with regulators is that they are often lawyers and politicians and not necessarily technologists.

"In that sense, we're talking to them so that they can understand what the capabilities of cloud are and then help them to make the right decision."

One feature of AWS's offering acts as both a reassurance and a provocation to regulators and civil authorities: encryption. Whereas privacy bodies such as Ireland's data protection commissioner, who acts as a de facto watchdog for all of Europe, love the growing standard of encryption, political bodies and security agencies are less keen on it.

But Vogels says that encryption should be viewed as a safety valve for a host of concerns about data being overly concentrated in any one place.

"We have encryption integrated in 116 of our services," he says. "Our customers are the only ones who decide who gets access to the data, and nobody else.

"If there's an interaction between law enforcement and the requests to a customer's AWS encrypted data, it's a conversation between the force with the customer."

Vogels says that some of the ingrained practices AWS has show it is structured to take account of necessary competition.

"I'm currently working closely with a German insurance company on what I would call an exit strategy," he says. "If you make use of a cloud provider, you might want to know what it would cost in terms of time and effort and money to actually exit.

"I think this is something that is healthy for any CIO worth their salt."

AWS's size and scale now mean that its data centres take up a measurable chunk of the local electricity grid wherever they are located.

In Ireland, it has several data centres, as do rivals Google and Facebook.

Taking part of the electricity grid was a factor in the appeal against Apple's bid to place a giant data centre facility in Galway, which was abandoned due to the length of the legal and planning process.

Vogels says that AWS knows about its responsibilities in this regard.

"Our goal is that we build 100pc renewable energy," he says. "In some locations, that is a bit harder to achieve but we always try to offset that by introducing solar or wind power. In the US, we are the largest wind farm operator east of the Mississippi."

In Ireland, Amazon is an increasing corporate and industrial presence. It employs 2,500 people, with AWS making up a sizeable chunk of that.

And it looks set to expand, with the web giant reportedly having signed a lease on a new Dublin office, which could take its staff to 4,000 in the next three years.

AWS's managing director for Europe, Andy Isherwood, told the Irish Independent that he could not comment on the company's plans to expand its operation in Ireland, but said that the growth of the company's business made expansion foreseeable.

"As we continue to grow the business, our teams are growing too," he says. "So by the very nature of growing, you're probably going to expand from a premises point of view."

Isherwood says that there is no apparent slowdown in the company's business.

"The growth continues to be astonishing," he says. "There's an insatiable appetite from startups to big enterprises. But the percentage of the market that we're addressing is only maybe 3pc."

Isherwood also says that Amazon's presence in Ireland was not affected by current international tension over tax reform.

"No," he says. "We think long term about the company and about the business. We don't make short-term decisions. If you think what we're doing around power and renewable energies, these are long-term big investments and Ireland is a pretty good place to do that.

"When you think about it, you can imagine the sort of capital investment involved. We don't change these decisions overnight."

On the re:Ignite stage before our interview, Werner Vogels' presentation included a segment on machine learning systems used in Amazon's Go shops, the retail units where you just take something from a shelf and it's charged to your Amazon account without the usual checkout procedure.

"The on-stage demo included what looked like heat-mapped video footage of human shoppers as they went about their business.

Amazon Go shops, he explained, were useful to inform machine-learning processes, quite apart from any physical retail ambitions the company has in this regard.

Are they working out? Or what is Amazon's ultimate ambition here?

"We're just trying to figure out whether we can make it work," he says.

"I mean, we're trying to be Earth's most customer-centric company. So that includes trying to look at what kind of convenience we can start to introduce for them or whether we can transform the grocery shop of the future and what that would look like. And then the second question is whether we can make it scalable."

But the shops are still just an "experiment", he says.

"Some experiments need to fail. It looks like it's working out really well, though. The question is whether at scale it will work out good enough."

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