Amazon Web Services has recovered from an outage that disrupted online activity worldwide for nearly a day, affecting businesses like Venmo and Coinbase to small merchants who rely on AWS for payment processing. After the third shutdown in five years, questions are mounting about how dependent businesses have become on the cloud computing giant.
The outage began shortly after midnight on October 20. The disruption originated at AWS’s largest and most essential data hub in Northern Virginia—the same location that experienced outages in 2020 and 2021. Services were mostly restored by that evening, but the interruption let merchants unable to process payments and disrupted sales for nearly a full day.
Slowly Migrating to AWS
In recent years, merchants, payment service providers, banks, and other companies across the payments supply chain have quietly migrated to AWS as a way to scale their businesses without the fixed costs of building or expanding a physical data center.
“Cloud platforms promise secure, scalable and most importantly redundant data processing,” said Don Apgar, Director of Merchant Payments at Javelin Strategy & Research. “Pay-as-you-grow data services have also enabled many fintech startups to get traction without having to invest significantly in data facilities. They can focus on the talent that will create the code, not the secure, climate-controlled buildings that will house the machines that run it.”
Seeking Stability Elsewhere
One of the primary selling points of large data centers, such as those operated by AWS, has been their reliability. Without that stability, many smaller companies might seek backup alternatives.
“Redundancy and uptime has always been part of the core value proposition of AWS,” said Apgar. “It will be interesting to see if this event will have a meaningful trend impact on AWS users either rethinking their cloud computing strategy or driving customers over to alternative providers, like Microsoft Azure.”
In the cloud computing market, Azure ranks second in market share behind AWS, but it has been steadily closing the gap. Meanwhile, the CrowdStrike outage in July 2024, which disrupted much of the internet, predominantly affected Microsoft systems.
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