The decision about which technology an institution buys determines whose technology ecosystem it inhabits — with implications that extend far beyond the procurement itself.
Procurement as Strategic Alignment
Technology procurement decisions determine not just which technical capabilities an institution has access to but which vendor ecosystem's standards, products, and upgrade trajectory the institution is aligned with. The institution that standardises on a specific cloud provider's infrastructure is not merely purchasing compute capacity — it is aligning with that provider's product roadmap, pricing trajectory, data governance terms, and integration ecosystem. The switching costs that this alignment creates mean that the initial procurement decision shapes the institution's technology trajectory for years beyond the contract period. Procurement framed as a technical capability acquisition is, in practice, procurement as ecosystem commitment — and the two are rarely evaluated with the same rigour.
The Power Asymmetry
The power asymmetry in technology markets — where a small number of very large vendors control the infrastructure on which a large number of smaller institutional buyers depend — shapes procurement decisions in ways that favour vendor interests over buyer interests in the long run. This is not a rhetorical exaggeration of market structure: in the global cloud infrastructure market, three vendors have for years controlled roughly sixty percent or more of worldwide spending between them, with every other competitor confined to low single digits of share. An institution choosing a cloud provider is, in most cases, choosing among three plausible options, not among a genuinely competitive field.
The vendor whose product is deeply integrated into institutional operations has leverage the buyer did not anticipate at procurement: switching costs have grown with integration depth, and the vendor can exploit that leverage in pricing renewals, in limiting interoperability with competitors, and in the terms attached to continued service provision.
The Mechanics of Lock-in
The mechanism is visible in a single, unglamorous line item: the data egress fee. Cloud providers typically charge nothing to move data into their infrastructure and charge per-gigabyte fees to move it out — an asymmetry that encourages accumulation inside the ecosystem while making departure progressively more expensive as data volume grows. This is not an incidental byproduct of network costs; it functions as a structural retention mechanism, and it has been treated as such by regulators. The European Union's Data Act, which entered into force in January 2024, required cloud providers to remove contractual, technical, and commercial obstacles to switching providers, explicitly naming egress fees among the deterrents to be addressed, with a full prohibition on switching charges — including data egress fees — due to take effect in January 2027. In direct response, Google, AWS, and Microsoft each announced, within weeks of one another in early 2024, programmes offering free data transfer out for customers migrating away from their platforms entirely.
That three of the world's largest technology companies moved in concert to waive exit fees only once compelled by regulation is itself evidence for the argument: the switching costs embedded in procurement were not an unfortunate side effect of infrastructure economics but a deliberate feature of it, invisible to most buyers until they attempted to leave. The feedback loop runs in one direction — integration depth rises, switching costs rise with it, vendor leverage rises with that — and it is largely self-reinforcing and unexamined at the moment the original contract is signed.
Technology procurement is not a purchasing decision — it is a strategic alignment decision. The institution that makes it without the strategic analysis it requires is making a years-long commitment to a vendor's trajectory without understanding the terms of the commitment it has accepted.
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