Cloud computing has evolved into an essential IT infrastructure model for businesses worldwide, transforming capital-intensive resources into usage-based, on-demand services. "Public clouds" provide scalable and accessible access to digital resources for a wide clientele.

Despite their name, these clouds are not truly public, as they are owned and operated by private corporations.

We believe that a well-regulated marketplace can turn closed, private markets for digital resources into true public utilities. From our perspective, such a marketplace could ensure fair competition and equal access to computing and storage capacity.

Society relies on digital resources — a public market ensures availability

The first argument against the assumption that public cloud services are truly public concerns their approach to accessibility. While public clouds are widely available, they do not guarantee equal access, as users must pay for the resources they consume — with pricing varying individually for each customer.

In contrast, public services are generally designed to be universally accessible, granting access to every citizen regardless of financial situation. These services are managed by public institutions, accountable to the public, operating transparently, and prioritizing the common good. This clearly does not align with the design intentions of large digital conglomerates that created the "public cloud." Their design criteria were shareholder value and profit maximization.

In today's digital age, cloud computing has become as essential as traditional utilities such as electricity or water. Both the digital infrastructure industry — comprising data centers, IT infrastructure providers, and cloud infrastructure and services — and the energy industry — represented by the power grid and energy producers — are large, technical, and complex systems that require maximum availability.

Our daily lives increasingly depend on digital services hosted on cloud infrastructure — from communication and entertainment to essential services such as healthcare or financial services. This dependency leads to digital infrastructure being the fastest-growing energy consumer globally. The critical nature of digital infrastructure means it must be reliable, secure, and accessible to all.

A well-regulated marketplace for digital resources could ensure availability. When public services are operated in the public interest, a regulated market can provide oversight and enforce standards for reliability, accessibility, and sustainability. This would be comparable to traditional utilities operating under regulation to prioritize the public benefit over profit interests. A regulated market would ensure equal access and fair competition, potentially governed by principles of public accountability and transparency. This would align digital resources and cloud infrastructure more closely with the functioning of traditional utilities, ensuring availability and benefiting the entire society.

Markets remain the most efficient way to maximize the utilization of digital infrastructure

The current cloud infrastructure is based on a usage-based model, making it a commercial service rather than a public good. This model is highly profitable for the operators of cloud infrastructure, who realize significant returns from investment goods: data center facilities, ICT equipment, and infrastructure software.

At an average annual utilization rate of over 30%, the business is profitable. This high return on capital makes it an optimal form of capital allocation, especially for capital-rich global digital companies like Amazon, Microsoft, and Google. The revenues from the cloud infrastructure and services they own directly benefit them — deepening their profitability and market dominance.

In contrast, public services like public transit or libraries are funded by taxpayers and managed by government agencies. These services are designed to serve the public interest while ensuring accessibility and affordability for all citizens. If "public clouds" were truly public, operational decisions would be guided by societal values and public interests — not profits and commercial interests.

For illustration, consider a comparison with power plants: If a private company owns a power plant, it has the ability to set prices and control utilization rates. At 30-40% utilization, a power plant can already be profitable, but this typically means higher prices for consumers. From a societal perspective, it is advantageous to operate power plants at about 80% utilization, as this optimizes resource use, reduces waste, and minimizes emissions. However, private companies may not be interested in increasing utilization if they can be more profitable at lower utilization rates.

This is where regulation plays a crucial role: It ensures that essential services like electricity (or cloud infrastructure) are operated with public benefit as a priority and that environmental standards are met. In the case of power plants, strict regulations ensure fair pricing and efficient resource use in the public interest.

A regulated marketplace for digital resources and cloud infrastructure can decouple the less profitable infrastructure segment from the more lucrative Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) offerings, leading to the commodification of digital resources. This would allow any IT infrastructure provider to compete for workloads (demand), while cloud service providers could source digital resources through a standardized, cost-efficient, and on-demand market. Such a system can significantly increase utilization rates, improve IT infrastructure efficiency, and reduce costs — thus accelerating digital transformation across industries.

A public market enables transparency and therefore effective governmental action

A public market for procuring digital resources would create the necessary transparency and enable effective government intervention. This approach would address the issues of the current market model, where the focus is on profits — often at the expense of all other aspects. Even if such a market were not entirely public, a well-regulated market can ensure fair competition, strengthen transparency, and promote sustainability.

The parallels with electricity markets, which have evolved over the past century to address similar challenges, demonstrate that both digital resources and electricity have commonalities as utilities — they are volatile, consumed immediately, and increasingly critical to life.

The consolidation behavior of electricity providers before market liberalization mirrors recent mergers and acquisitions in the digital infrastructure sector. By leveraging the experiences from the liberalization of the energy sector and applying its market model to digital resources in Europe, we can avoid the historical bottlenecks of electricity markets.

Such a marketplace would create fairer conditions and enable more European IT infrastructure providers as well as SMEs and innovators to enter the market, fostering a diverse national and regional digital infrastructure. Interoperability would replace vendor lock-in and improve the quality and suitability of services. Moreover, competition would increase efficiency — both the utilization of data center facilities and ICT equipment —, reducing energy waste and lowering CO₂ emissions. Consumers would benefit from more competitive and transparent pricing, accelerating Europe's digital transformation.

In summary, although public clouds are indispensable, their private ownership and profit-oriented focus mean they do not function as true public utilities. A well-regulated marketplace would ensure that the infrastructure is managed for societal benefit — with equal access, public accountability, and efficiency. This would safeguard public interests and achieve a transformation comparable to that of the European electricity sector.

This article is part of our work on the project “Cloud of Amsterdam”, funded by the province of North Holland.