Cloud fragility is costing us billions

It was supposed to be a routine Tuesday. Employees trickled into the office of a mid-sized logistics company; some grabbed coffee, others settled at their desks. As they tried to access their shipment-tracking dashboards, schedule pickups, or even log in to the HR portal, critical systems inexplicably went offline. Chaos ensued.

The IT team scrambled to diagnose the problem, initially confused because their company’s tech infrastructure didn’t rely on the major cloud service that had been hit by a significant outage that morning. Hours later, they learned their software vendors—and their vendors’ vendors—depended on that cloud provider. Like many others, the company unexpectedly fell victim to the complexities of modern cloud systems.

This story echoes across industries every time an infrastructure as a service (IaaS) provider stumbles. It happens more often than most realize. The truth is that we’ve constructed a digital world on a surprisingly fragile foundation, building whole economies, sometimes unknowingly, on just a handful of hyperscaler companies.

The domino effect

Beneath the elegant veneer of mobile apps, dashboards, and connected devices lies a labyrinth of technical dependencies. Cloud computing promised affordable scalability and offloaded complexity. As adoption snowballed, a handful of giants (Amazon Web Services, Microsoft Azure, Google Cloud Platform) and a small circle of others became the backbone for modern digital services. These hyperscalers offer infrastructure so ubiquitous that many technology providers, even ones hesitant to rely on the tech titans directly, still depend on them indirectly through partner services, APIs, or even core infrastructure providers that themselves run on the cloud.

When one of these hyperscalers suffers an outage, the impact is uncontained. It cascades. In late 2025, for example, three major outages at Amazon Web Services, Microsoft Azure, and Cloudflare rippled across industries with astonishing speed. Delta and Alaska airlines couldn’t check in passengers. Gaming and streaming platforms like Roblox and Discord ground to a halt. Even internet-connected “smart beds” and residential video doorbells became unusable.

It’s tempting to write these off as embarrassing but rare moments in the industry’s upward arc, but the frequency is increasing. More importantly, the scope is far broader than what’s visible on outage maps. For every downed social media giant, thousands of enterprises, municipalities, and nonprofits experience the same disruptions in silence, sometimes without even knowing where to place the blame.

Costs are higher than they appear

Whenever an outage disrupts our digital core, the damage extends beyond customer complaints. The adverse effects are immediate and widespread: decreased productivity, delayed or missed financial transactions, and erosion of trust.

Estimating the global economic loss from outages is also tricky. Brief disruptions can cost companies hundreds of millions of dollars in downtime, lost transactions, customer support costs, and reputational damage. The hidden costs for third-party providers, such as compensating customers and re-architecting platforms, push the total losses into the billions.

It’s not just about money. Modern life depends on the invisible infrastructure of the cloud. Outages lead to confusion, missed opportunities, and sometimes serious risks, such as medical services or public utilities going dark due to software failures deep within their systems.

Typical approaches fail

Following these outages, calls for regulation have intensified. Lawmakers and consumer advocates seek to investigate, enforce redundancy, and possibly even break up platforms that are increasingly regarded as “too big to fail.” That’s understandable, but it only addresses the most superficial layer of the issue.

Regulatory guardrails can only do so much; outages often result from minor errors, bugs, or routine changes more than from catastrophic hacks. No legislation can prevent typos, misconfigurations, or software mishaps. If anything, the drumbeat for outside intervention can give businesses a false sense of security, believing that safety is someone else’s job, or that headline-grabbing outages are unavoidable acts of fate.

The urgent need for resilience

The solution is both challenging and empowering. Enterprises must own their architectures, identify direct and indirect dependencies, and plan for failures. Resilience can’t be an afterthought or delegated solely to IT; it must be a core mindset of every digital transformation.

This requires answers to some tough questions: If a core provider or one of our technology partners suffers an outage, what happens? Which systems go offline, which degrade gracefully, and which are truly mission-critical? How can redundancy—real, cross-provider redundancy, not mere failover within a single vendor’s walled garden—be built into every layer of operations? Are we confident in our disaster recovery and business continuity strategies, or do they only exist on paper?

The recent series of outages was a wake-up call, highlighting how few organizations have truly robust plans in place. Too many were caught flat-footed, unsure how to respond or not even sure what had failed and why.

A plan built on awareness and action

We are not powerless in the face of these challenges. The answer isn’t to “uncloud” entirely or freeze innovation, but to build digital ecosystems that acknowledge their real-world fragility. This means deeper due diligence when selecting partners, open conversations about dependencies, and above all, engineering for failure rather than assuming it won’t occur.

The lesson should be clear by now: The interconnected nature of cloud services means the entire economy is only as resilient as its weakest link. Enterprises must look beyond the marketing gloss and prepare for the inevitable, not just the ideal. Only through proactive, ongoing investments in resilience can we stop reliving the same costly surprises week after week.