Jongkil Jay Jeong, The University of Melbourne

The world’s largest cloud computing platform, Amazon Web Services (AWS), has experienced a major outage that has impacted thousands of organisations, including banks, financial software platforms such as Xero, and social media platforms such as Snapchat.

The outage began at roughly 6pm AEDT on Monday. It was caused by a malfunction at one of AWS’ data centres located in Northern Virginia in the United States. AWS says it has fixed the underlying issue but some internet users are still reporting service disruptions.

This incident highlights the vulnerabilities of relying so much on cloud computing – or “the cloud” as it’s often called. But there are ways to mitigate some of the risks.

Renting IT infrastructure

Cloud computing is the on-demand delivery of diverse IT resources such as computing power, database storage, and applications over the internet. In simple terms, it’s renting (not owning) your own IT infrastructure.

Cloud computing came into prevalence with the dot com boom in the late 1990s, wherein digital tech companies started to deliver software over the internet. As companies such as Amazon matured in their own ability to offer what’s known as “software as a service” over the web, they started to offer others the ability to rent their virtual servers for a cost as well.

This was a lucrative value proposition. Cloud computing enables a pay-as-you-go model similar to a utility bill, rather than the huge upfront investment required to purchase, operate and manage your own data centre.

As a result, the latest statistics suggest more than 94% of all enterprises use cloud-based services in some form.

A market dominated by three companies

The global cloud market is dominated by three companies. AWS holds the largest share (roughly 30%). It’s followed by Microsoft Azure (about 20%) and Google Cloud Platform (about 13%).

All three service providers have had recent outages, significantly impacting digital service platforms. For example, in 2024, an issue with third-party software severely impacted Microsoft Azure, causing extensive operational failures for businesses globally.

Google Cloud Platform also experienced a major outage this year due to an internal misconfiguration.

Profound risks

The heavy reliance of the global internet on just a few major providers — AWS, Azure, and Google Cloud — creates profound risks for both businesses and everyday users.

First, this concentration forms a single point of failure. As seen in the latest AWS event, a simple configuration error in one central system can trigger a domino effect that instantly paralyses vast segments of the internet.

Second, these providers often impose vendor lock-in. Companies find it prohibitively difficult and expensive to switch platforms due to complex data architectures and excessively high fees charged for moving large volumes of data out of the cloud (data egress costs). This effectively traps customers, leaving them hostage to a single vendor’s terms.

Finally, the dominance of US-based cloud service providers introduces geopolitical and regulatory risks. Data stored in these massive systems is subject to US laws and government demands, which can complicate compliance with international data sovereignty regulations such as Australia’s Privacy Act.

Furthermore, these companies hold the power to censor or restrict access to services, giving them control over how firms operate.

The current best practice to mitigate these risks is to adopt a multi-cloud approach that enables you to decentralise. This involves running critical applications across multiple vendors to eliminate the single point of failure.

This approach can be complemented by what’s known as “edge computing”, wherein data storage and processing is moved away from large, central data centres, toward smaller, distributed nodes (such as local servers) that firms can control directly.

The combination of edge computing and a multi-cloud approach enhances resilience, improves speed, and helps companies meet strict data regulatory requirements while avoiding dependence on any single entity.

As the old saying goes, don’t put all of your eggs in one basket.

Jongkil Jay Jeong, Senior Fellow, School of Computing and Information System, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

When Australian Prime Minister Anthony Albanese meets US President Donald Trump on Monday, the visit is expected to seal major big tech investment deals on artificial intelligence (AI) and data centres.

In the lead-up, Atlassian cofounder Scott Farquhar (in his role as chair of the Tech Council of Australia) has been pitching a plan to make Australia a “regional AI hub”.

In July, Farquhar unveiled his vision in a speech at the National Press Club of Australia in which he held up Singapore and Estonia as proof that nimble regulation to attract foreign capital can turn nations into digital powerhouses.

But based on my research on the geopolitics of data-centre markets, these examples don’t quite hold up – and following them risks narrowing the debate about Australia’s tech future at a crucial moment.

However, as Australia advances its AI agenda, these examples can offer important lessons if read more carefully.

The Estonian data embassy

Farquhar proposes Australia should host “digital embassies”. These would be datacentres on Australian soil owned by foreign companies and exempt from Australian law. He cites as a precedent Estonia’s data embassy in Luxembourg.

Estonia’s case, though, is quite different from what Farquhar proposes. After a series of Russian cyberattacks in 2007, Estonia sought to guarantee the continuity of government if its domestic systems were ever disabled.

The result was a bilateral treaty with Luxembourg. The treaty allows encrypted copies of critical state registries – citizenship, land and business records – to be stored under Estonian jurisdiction abroad.

It was an act of defensive statecraft built on the Vienna Convention. This agreement grants diplomatic immunity to state functions but explicitly excludes commercial activity.

By contrast, the digital embassies proposed by Farquhar would cater both to states and to foreign corporates. It would allow them to operate under their own law but draw on Australian resources.

Farquhar himself concedes this would necessitate revising the Vienna Convention. But this would undermine six decades of established diplomatic practice and further destabilise an already fragile international system.

Without the diplomatic costume, Farquhar’s digital embassies look more like special economic zones. These are areas designed to attract investment through the strategic loosening of laws.

What really transformed Singapore

Farquhar’s reading of Singapore’s example similarly overlooks its deeper economic and political foundations.

Singapore is often romanticised by neoliberal thinkers as a haven of free enterprise. But Singapore’s success in using its natural strengths and foreign direct investment has rested on massive state-led investment and equity in infrastructure and firms.

Through its sovereign wealth funds, Temasek and GIC, Singapore retains dominant stakes in its airlines, banks, ports and telecoms. That same strategic state investment produced Changi Airport and the Jurong Industrial Estate, cornerstones of Singapore’s regional hub status.

Australia has taken a different path.

For example, recent Australian Tax Office data shows major technology firms – such as Amazon Web Services, Microsoft and Google – have secured billions in government contracts while contributing relatively little in tax.

In 2024, Microsoft reported $8.63 billion in Australian revenue, but only $118 million – about 1.4% – was payable in tax. Amazon Web Services earned $3.4 billion locally yet paid just $61 million after deductions reduced its taxable income to $204 million.

Much of this is explained by profit-shifting arrangements. Most revenue is booked in tax havens such as Ireland through inter-company “service fees”.

US tech companies have undoubtedly captured significant domestic value. However, local benefits, such as jobs, exportable digital industries and global competitiveness, remain largely hypothetical.

A cloudy memory

Australia has chased the dream of jurisdictional deregulation before.

More than a decade ago, Google and Microsoft told then prime minister Julia Gillard they could build a “Silicon Beach” here. This echoed Ireland’s “Silicon Docks” – a digital growth strategy of creating a deregulated haven for big tech.

Farquhar’s AI-hub vision appeals to the same logic. However, it has even thinner appreciation for the statecraft and public investment required.

Without it, Australia is unlikely to achieve AI hub status.

Some will argue Australia’s minerals and favorable relations with the US make it an inevitable frontier of data-centre expansion. Yet that position also gives Australia leverage to define sovereign growth on its own terms.

As economist Alison Pennington has asked, “is a shift from foreign-owned mining to foreign-owned data mining with even less control the best we can do?”

If Australia wants to build a resilient and credible AI sector, it won’t find its edge by joining the global race to the bottom – puncturing its territory with legal carve-outs and filling them with foreign-owned and unfettered direct investment.

Instead, Australia could build a model of sovereign control by investing in public infrastructure, skills and governance frameworks that secure national forms of ownership and accountability.

Angus Dowell, PhD Candidate, University of Auckland, Waipapa Taumata Rau

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Jeff Borland, The University of Melbourne

The rate of unemployment in Australia is on the rise again. Official labour force data released on Thursday shows that in the month to September, Australia’s seasonally adjusted unemployment rate jumped from 4.3% to 4.5%.

That’s the highest rate since November 2021. The surprise jump strengthens the case for the Reserve Bank of Australia to cut the official cash rate in November.

Back in November last year, the seasonally adjusted rate of unemployment was 3.9%. It has now been above 4% for ten consecutive months, and has only been going in one direction: up.

What could this mean for interest rates?

In its recent decisions, the Reserve Bank’s monetary policy board has jumped at any signs of higher price inflation. But it has retained a favourable outlook on labour market conditions.

In its most recent September decision, the board stated:

labour market conditions have been broadly steady in recent months and remain a little tight.

Such an outlook does not seem an option in light of today’s unemployment numbers.

The Reserve Bank has a full employment mandate to achieve “the maximum level of employment consistent with low and stable inflation”.

The mandate doesn’t put a specific numerical rate on this full employment goal. However, the rate of unemployment is now well above any credible estimate of full employment.

Employment growth is slowing

The reason why the rate of unemployment is rising is not hard to spot. Employment growth is slowing.

In 2024, my calculations based on the official labour force data show an average of 32,600 extra people became employed each month, compared with an extra 33,900 looking for work.

With growth in employment and the labour force relatively balanced, the rate of unemployment remained stable.

So far in 2025, each month only an average of 12,900 extra people have moved into employment.

The number of people looking for work has responded to the weaker labour market conditions, also growing less each month than in 2024, by 22,100 on average.

But unemployment is rising because the increase in the number of people looking for work in 2025 has been much bigger than the increase in employment.

A cooling jobs market

No matter which statistic you look at, my analysis of the official labour force data reveals the signs of a weakening labour market are clear to see.

Monthly hours worked grew on average by 0.27% each month in 2024, but only 0.04% so far in 2025.

In 2024, the total stock of jobs rose by 351,600. In the first six months of 2025, it grew by just 44,100.

And the proportion of people who have jobs, but want to work more hours, has increased from 9.9% to 10.4% since the end of 2024.

Government spending

The reason employment growth is slowing is not what might have been expected – but is even more worrying.

Since about mid-2021, employment growth in Australia has been propped up by a fast pace of job creation in what is known as the non-market sector, which consists of:

• health care and social assistance
• education and training
• public administration and safety.

That growth has come about as the federal government has pushed for improvements in the quality of government services, and expanded the National Disability Insurance Scheme (NDIS) and childcare services.

It has been expected for some time that eventually, the rate of increase in government spending on services would slow. That would in turn cause growth in non-market employment and total employment to slacken.

What’s really driving the trend?

However, that is not what has caused the slower employment growth in 2025.

In fact, today’s data release shows that growth in total hours worked in the non-market sector has continued at pretty much the same pace as in previous years.

Instead, the drop-off in total hours worked has been due to employment in the market sector declining.

Private employers are responding to what they see as weaker economic conditions, by reducing the rate at which they are adding new jobs.

This is a further undeniable sign of a weakening labour market.

Jeff Borland, Professor of Economics, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.