This article first appeared on GuruFocus.
Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOG), Amazon Web Services (NASDAQ:AMZN) and Oracle (NYSE:ORCL) will come under direct UK financial regulatory oversight as the government moves to reduce the risks created by banks’ growing reliance on cloud computing.
The companies were designated Critical Third Parties to the financial sector, with the new rules taking effect July 13. The Bank of England, Prudential Regulation Authority and Financial Conduct Authority will jointly oversee their critical services, require incident reporting and monitor operational resilience.
The 4 companies provide cloud computing infrastructure that lets businesses store data, run applications and access computing power remotely. Their platforms have become increasingly important to banks, insurers and financial market infrastructure firms.
The concern is concentration. A major outage or cyberattack at 1 widely used cloud provider could disrupt several financial institutions at once, creating risks that spread well beyond a single company.
