As Cloud Computing Providers Post Record Profits, One Company Wants to Make Them Obsolete

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Could the world's idle computers make the $200 billion cloud computing industry obsolete?

In the final years of the Obama administration, it seemed that the world was witnessing the emergence of an odd alliance between the largest establishment tech companies and the traditionally anti-establishment community of independent techies. The highest profile case involved Apple and other major corporations siding with civil rights organizations to advocate against weakening device encryption on behalf of law enforcement, and it it led to a hope that these companies were finally seeing the profit potential in having secure, satisfied customers. That hope has now evaporated in the face of continuous betrayals of user trust, and rather than take it lying down, tech users are looking into alternative solutions that put them in control.

The recently passed federal Clarifying Lawful Overseas Use of Data Act, or the CLOUD Act, makes it perfectly clear why this shift away from self-interested stakeholders is so necessary. The new law was motivated by a legal demand for Microsoft to hand user data to US law enforcement, even though that data was stored outside US borders and, thus, in a different legal jurisdiction. At first, it seemed that Microsoft was planning to stand up for privacy and national sovereignty by opposing the demand in court—but, predictably, the corporation rolled over just as soon as it deemed that its own interests were protected.

The goal of the CLOUD Act is for the US to be able to compel any company that does business in the country to provide information to US law enforcement, even if that information is not actually stored within the US. If it's successful, a company's willingness to fight will become essentially irrelevant. It makes all cloud computing and cloud storage companies suspect, simply by virtue of being cloud computing companies.

Groups like the Electronic Frontier Foundation and the American Civil Liberties Union believe it also could allow US law enforcement to seize information in foreign jurisdictions because those regions have more lenient privacy laws than the US itself. The reverse, in which foreign law enforcement agencies operating under more stringent rules than the US, could gain access to protected information stored in the country, is also a major concern.

These fears are compounded by a basic lack of trust in American-based tech companies that theoretically act as advocates on behalf of their customers—many of which have abysmal records of actually following through. The concern isn't just that cloud usage data could be given up involuntarily to an outside party, but that such data could be intentionally and proactively packaged and sold to an outside party. Even professed mistakes can have shocking implications for personal boundaries and the expectation that modern life comes with any privacy at all.

With traditional network technology, there was no way to cut these large service companies out while still remaining as agile and profitable as the competition, or while maintaining the features that modern users demand. Today, however, advanced and emerging ideas, like the blockchain technology behind Bitcoin, are chipping away at the built-in advantage held by moneyed corporations. They're empowering startups and even individuals to automate the bottlenecks that previously made large third parties a necessity for all cloud services. Modern blockchain-focused startups are developing services that make it possible for individuals to administer the crucial aspects of cloud computing securely, without involving a third-party service provider that weakens security and charges an extra fee.

Subutai, a blockchain-based cloud computing service, allows users to buy and sell computing time to create the exact amount of computing power they need for a given job, without having to invest in all that power as hardware. Users can sell their idle computing time over the service in exchange for blockchain-validated digital tokens, which can be redeemed to purchase time on other idle computers hooked up to the service. Beyond creating ad hoc cloud computing networks without the need for a corporate overseer, this model also essentially makes computing downtime useful by allowing it to subsidize the extra power needed for later, tougher projects.

Another blockchain-based startup, called AXEL, is similarly trying to wrest a portion of the cloud from large stakeholders—this time, cloud storage. By letting users set up their own remote storage devices, rather than paying an exorbitant monthly fee for access to a terabyte of storage space, AXEL users simply can buy a cheap terabyte drive, plug it in to their desktop at home and link it to their AXEL account—at that point, they have an entirely private connection to that HDD that allows full cloud access without even the possibility of outside interference or surveillance by the service provider. And if you want another five terabyte of cloud storage? It's as easy as buying five more terabytes of storage and hooking them up to the network. Since you own the drives, moving a file onto a linked drive takes zero upload time—it's in your cloud-linked folders, after all, and thus has nowhere else it needs to go.

That sort of versatility, where freezing out large corporations doesn't just preserve features but actually expands them, is why the blockchain has such potential to upend the cloud space. Large cloud services corporations, from Amazon to Google to Microsoft, have reached their current level of dominance not by satisfying their customers but by correctly pointing out that they were the only game in town—but now, the users can start to provide an alternate solution all their own.

It remains to be seen whether these companies will notice the impending danger to their business model in time to act—or, more to the point, whether there is any action they could take that would make them desirable in the face of growing privacy issues and ever-more-user friendly competition.

Corporate cloud service providers are facing an existential crisis, and given their increasingly aggressive practices and pricing, it seems as though they don't even know it. New challengers in tech are proving more than happy to show them.

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