A new policy paper from the Vanderbilt Policy Accelerator (VPA) offers one of the most detailed legislative frameworks to date for regulating the cloud computing sector, highlighting how market concentration and security vulnerabilities pose growing risks to economic and national security. Titled How to Regulate the Cloud, the analysis, authored by Asad Ramzanali, a former House Energy and Commerce Committee counsel, outlines a comprehensive policy roadmap to improve competition, resilience, and governance in a market increasingly dominated by a few hyperscale providers. Rather than simply diagnosing existing problems, the paper presents concrete, actionable solutions for U.S. policymakers.
The report arrives at a time when cloud infrastructure has become foundational to industries ranging from banking and healthcare to artificial intelligence and defense. Yet despite its central role in the digital economy, the cloud market remains weakly regulated, concentrated, and vulnerable to systemic failures. The VPA’s proposals signal a shift in how policymakers might begin to treat cloud computing less as a lightly governed tech service and more as critical national infrastructure.
A Concentrated Market with High Barriers to Entry
One of the central claims of the VPA analysis is that the cloud market is suffering from classic symptoms of a monopoly-like structure. According to the paper, Amazon Web Services, Microsoft Azure, and Google Cloud Platform collectively control about two-thirds of the global market, a share that has remained relatively stable over the last decade.
The report points to multiple reinforcing mechanisms that entrench this dominance. These include vertically integrated service offerings that allow providers to bundle infrastructure and software, significant first-mover advantages in global data center deployment, and opaque pricing structures that make it difficult for customers to compare services or switch providers. In particular, high switching costs and the absence of effective interoperability standards lock in clients and discourage smaller competitors from scaling.
This lack of contestability, Ramzanali argues, is not simply an economic concern. It also limits innovation, constrains AI development pipelines that rely on cloud compute, and increases systemic risk by concentrating critical digital functions in a handful of private hands.
National Security and Systemic Risk
The VPA report devotes substantial attention to the national security dimensions of cloud concentration. Ramzanali warns that over-reliance on a few providers for critical infrastructure poses severe systemic risk in the event of outages, cyberattacks, or political coercion. The cloud now supports everything from financial transactions and hospital records to satellite communications and military-grade AI applications. A single point of failure in this architecture could have cascading effects across sectors.
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These concerns are not hypothetical. Industry analysts have consistently highlighted cloud-specific vulnerabilities, including misconfigurations, insufficient encryption, and exposed APIs. Moreover, the U.S. Department of Defense and intelligence agencies have already moved to diversify cloud contracts to avoid vendor lock-in, signaling institutional awareness of the risks.
Ramzanali contends that current oversight mechanisms are not sufficient to address these issues. The voluntary nature of security protocols, lack of independent audits, and absence of clear federal oversight for cloud resilience leave a gaping hole in U.S. cyberdefense strategy.
A Policy Framework Grounded in Utility Regulation
To mitigate these structural problems, the VPA proposes a policy approach rooted in lessons from telecom and utility regulation. Among the key legislative recommendations are structural separation between cloud infrastructure and software businesses, mandatory interoperability standards, pricing transparency requirements, and data portability rules to reduce switching friction.
In addition, Ramzanali calls for reclassifying major cloud providers as critical infrastructure, which would trigger federal resilience standards and government oversight. He also advocates for foreign ownership restrictions on sensitive infrastructure and for providers to implement “know-your-customer” protocols to deter misuse by bad actors or adversarial governments.
The underlying goal is to reintroduce competition and public accountability in a sector that has evolved with minimal regulatory friction but now underpins vast portions of economic and strategic life.
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Implications for U.S. and Global Policy
The VPA’s proposals are part of a growing transatlantic consensus that the cloud market needs intervention. In early 2025, the U.K. Competition and Markets Authority concluded that Microsoft and Amazon’s dominance “limits competition and innovation,” and proposed new powers to regulate their licensing practices. The European Union, too, has been moving toward interoperability mandates and restrictions on vendor bundling under its Digital Markets Act.
Whether U.S. lawmakers will act on the VPA’s blueprint remains uncertain. Industry resistance will be strong, and concerns about stifling innovation or adding regulatory complexity are already being voiced. However, the analysis makes a compelling case that the costs of inaction, economic stagnation, cybersecurity failures, and strategic vulnerability, may soon outweigh the political difficulty of reform.
Ramzanali’s report marks a turning point in the debate, offering not just critique but a legislative map. It calls on policymakers to treat cloud infrastructure as the backbone of modern society, and to govern it with the seriousness that status demands.
