Vendor lock-in – scary or not so scary?

In 2020, Epic Games filed a lawsuit against Apple, accusing the company of monopoly and lock-in on its iOS developer platform. Epic Games argued that Apple does not give developers alternative ways to distribute their apps and forces them to use only the App Store, where the company takes a 30% commission on revenue. The trial lasted several months, and in the end, the judge decided that Apple was not a monopolist, but admitted that the company was abusing its market position. The latest news on the case is that the US Supreme Court has rejected Epic Games' appeal.

Sometimes companies forget that transferring data to another area or completely deleting it from a cloud service incurs additional fees. Only later, they discover that one of the services, based on moving data from one provider to another, causes their cloud bill to increase significantly. An internal document leaked from AWS demonstrates this perfectly. Apple paid $50 million in data fees for one year only. Pinterest have to spend more than $20 million. Netflix and Airbnb – more than $15 million. So what lesson can we learn? That is right, pay attention to vendor fees and know what you are getting into before you sign a contract. This is especially important if you are reserving capacity for several years in advance.

These examples are good illustrations of the vendor lock-in problem and monopoly in technology. Vendors are accused of creating conditions that make it impossible for competitors to enter the market and discourage customer choice. These cases show that everyone in the IT industry can face the problem of vendor lock-in.

So let's start from the beginning.

What is a vendor lock-in?

In economics, the term vendor lock-in means a situation when a customer becomes dependent on a vendor and can’t switch easily to another vendor without significant cost.

Supplier lock-in is a problem that we face in everyday life. For example, when you sign a contract with a specific cable provider, your choice of channels and plans is limited to what that provider offers. Switching to another supplier may be difficult due to incompatible equipment or the high cost of new equipment.

In the cloud services industry, vendor lock-in refers to a situation where you become dependent on a specific cloud service provider. The main challenge is that you dependent on changes that providers may make. In the long term, you will find it difficult to switch to another supplier without running into problems, such as high costs, legal restrictions, or technical incompatibility.

Main pros and cons

In our modern world, characterized by pervasive and intricate technology, vendor lock-in is steadily becoming more prevalent. Companies and organizations are increasingly choosing one supplier for all their technology needs, rather than using different ones for different parts of their business. Let's look at the main advantages and disadvantages so you can make a more informed decision about which approach is right for your business.

Here are a number of advantages of vendor lock-in:

1. Convenience and simplification of technology management and maintenance processes, since the entire technology stack will be integrated and compatible with each other.
2. Saving time and resources on training and support of various technologies. In addition, you can receive discounts and special offers on services and products.
3. Easy to use. You do not need to search for and install different programs and applications, since they will all be integrated and work as one.

And disadvantages:

1. You cannot easily switch to another provider if you run into problems or find a better solution.
2. The supplier may increase prices or change the terms of the contract, which may increase your costs.
3. Your business may become vulnerable if the supplier encounters problems or no longer meets your needs.
4. You may be limited in the new technologies and innovations your business needs.
5. Limited flexibility. You cannot quickly respond to changes in the market or your needs.
6. There is no opportunity easily change the terms of the contract.

Independence strategy

In a world of rapidly evolving technology, we understand that technological innovation can sometimes bring more questions than answers. Cloud technologies, which have become an integral part of everyday life, are no exception. For example, in 2011, Dropbox experienced an outage that resulted in data loss for many users. This happened due to problems with one of the key cloud service providers, Amazon Web Services (AWS). This incident highlights how locking into a single cloud provider can leave your company vulnerable and affect your customers' experiences.

How to avoid such situations? It is important to follow a specific strategy.

1. Using multiple suppliers. You should not rely on just one supplier for all your needs. If you have several suppliers, you can compare their offers and choose the best ones for you. This way you distribute the risks between them.

2. Compatibility with open standards. Your system or product should be compatible with open standards so you can easily switch between different vendors. You will be able to use open APIs and integrate with other systems.

3. An alternative approach to cloud technologies. Consider investing in other forms of cloud architecture, such as hybrid or multi-cloud, which will allow you to avoid some of the risks.

4. Renegotiation of contracts. Regularly review contracts with your suppliers to ensure they meet your needs.

5. Development of internal skills. Increase internal competencies to work with different suppliers.

6. Participation in the developer community. Stay up to date with the latest trends and technologies. This allows you to make informed decisions about choosing suppliers and avoid being locked into one.

Multi-cloud concept

The issue of effective data management and cost optimization will always be relevant. In this case, the multi-cloud concept may come to the fore, which represents a flexible and innovative solution for modern businesses. Multi-cloud is based on the idea of distributing data and load across multiple cloud platforms, allowing companies to improve the security, reliability and flexibility of their infrastructure while minimizing risks and costs. A multi-cloud environment often includes multiple cloud solutions from public and private cloud infrastructure.

Multi-cloud is used for businesses with increased data security requirements, e-commerce or medical institutions, where it is important to maintain the confidentiality and integrity of data.

SIM-Networks has been building infrastructure for business for more than fifteen years. Our competencies and experience, large-scale deployment and custom development lead to optimized performance, creating a flexible and scalable cloud environment.

We understand that storing all your data and applications on one platform like AWS can be costly and limiting. Therefore, we suggest combining different cloud platforms. You can host the bulk of your data and applications on our cloud server, providing the optimal combination of performance, cost and reliability. You can use your preferred combination of on-premises infrastructure and public cloud services as a secure cloud foundation. At the same time, you maintain the scale and flexibility needed to grow your business successfully. This solution is a good tool for achieving business goals in a rapidly changing digital world.

Encouraging findings

In the world of information technology, every decision made requires suitable investment and effort. It is very important that experienced specialists, engineers, developers, or management, make decisions from this position. Whether you are building a specific API, choosing a storage platform, or entering into a contract, it's important to ask yourself: How much effort and resources will it take to make changes to production, and is it worth it? Evaluate your efforts and calculate your costs.

Instead of thinking of it as scary and inevitable, let's define vendor lock-in as a situation in which the effort and cost of change greatly outweighs the expected benefit. If we look at everything from this point of view, lock-in will no longer seem sinister.

In conclusion, we would like to emphasize that one of the promising ways to avoid dependence on the local infrastructure vendor is the transition to multi-cloud. Combining different cloud platforms, as well as distributing data and load between them, will reduce the risks associated with the failure or policy changes of one cloud service provider, as well as provide a higher level of security, reliability and flexibility in managing the IT infrastructure.

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