The following is a guest article by Dr. Silvia Weko, Postdoc at the FAU Chair of Sustainability Transition Policy at the University of Nuremberg.
Amazon has grown rapidly in recent decades. The original online bookseller has expanded its business to include logistics, AI, robotics and cloud services. Now Amazon is also making inroads into the energy sector. What does this mean for the energy transition and the power of big tech companies?
Digital energy systems: new opportunities for big tech
New research shows that big tech companies are extending their corporate power to energy systems. They see an opportunity: the need for digital infrastructure to operate clean energy systems. The energy transition requires well-organised data on energy supply and demand, such as the amount of output from a wind turbine or the peak demand for charging electric vehicles at different times of the day. This data is collected by companies such as energy system operators and is their protected property. However, in order to use this data to optimise energy systems and develop new innovations, these companies often rely on cloud services from technology companies that have experience in collecting and analysing large data sets using AI techniques. Large companies such as Siemens use cloud services to build their own technology stack. Big Tech argues that it is cheaper and faster to digitise the energy sector with their infrastructure than for each energy company to build its own capabilities.
As a result of these changes, the energy transition is becoming dependent on the digital infrastructures of the major cloud providers Amazon, Google and Microsoft. This technological dependency enables Big Tech to expand into the energy sector: thanks to its access to energy-relevant data and expertise in the field of AI, Big Tech can bundle knowledge and thus create economic value. So far, this has been a blind spot because the focus has tended to be on the ecological impact of AI and other technology products. It urgently requires more attention that Big Tech expands its corporate power in a strategically very important sector.
Amazon and energy systems
The study on Amazon shows that big tech companies are using their central position in data and innovation networks and their AI expertise to expand their business areas and their position of power.
Amazon collects important data using its own infrastructure: energy plants, battery storage, electric vehicles and data centers, as well as from its electricity suppliers. Amazon Web Services, Amazon’s cloud service, also generates data and information from other companies: When used, providers are given the opportunity to learn from and with this data or to train AI models. Amazon Web Services has a third of the global market share of cloud services and many energy companies already use its cloud services. In addition, traditional energy companies are also entering into partnerships with Amazon.
Amazon uses this data to improve its services, make investment decisions and develop new technologies. In recent years, Amazon has invested billions in new means of transportation, smart home technologies, energy management companies, hydrogen technologies and much more.
Amazon also invests in innovative green start-ups: they receive loans to use its cloud services so that their technologies are also based on Big Tech’s digital infrastructures. Amazon also develops its own innovations and, for example, has its own team that optimises power generation from renewable energies, manages its global energy plants and carries out maintenance work. Amazon is also developing innovations with partners to operate thermostats as virtual power plants or optimise the charging of electric vehicle batteries.
Combating data-based corporate power
As in other sectors, digitalisation is a growth opportunity for Big Tech – other companies can hardly compete. Its existing capabilities and infrastructure allow Amazon to collect data, train AI models and build important innovation advantages.
Other tech companies are also expanding in this area: Google and Microsoft are involved in building critical digital infrastructures for energy-related companies and other stakeholders. For example, Google is developing virtual power plants and is running the “Moonshot” initiative Tapestry, a project that focuses on efficient electricity grid management.
Some observers hope that decentralized systems such as the internet or renewable power generation will tend to be democratic and not monopolized. We need to critically scrutinize and understand these ideas: How do these systems really work? Who has power? Who benefits and why? If we look behind the scenes, it becomes clear that the companies that control data and cloud infrastructures can influence technologies, innovation ecosystems and markets to suit their interests.
So to curb the influence of Big Tech, we need to bring additional policy options into play:
- regulate more strictly to make it easier to switch between the “Big Three”;
- break up monopolies, as is currently being discussed for Google;
- create alternatives, such as a public cloud provider.
In the energy sector, there is already experience with natural monopolies such as electricity grids that are publicly operated. All that is needed is the political will to apply similar forms of intervention to less visible infrastructures.
