FSOC should bring AWS under the supervision of the Federal Reserve as a utility

WASHINGTON— A powerful group of organizations from across the labor, anti-monopoly and social justice spheres came together to send a letter to the Financial Stability Oversight Council (FSOC) today. Spearheaded by Open Markets Institute, the letter asks the FSOC to designate Amazon Web Services (AWS) as a Systemically Important Financial Market Utility (SIFMU), which would bring AWS under the supervision of the Federal Reserve.

The groups, which include the Institute for Local Self-Reliance, Liberation in a Generation, the Action Center on Race and the Economy, the Strategic Organizing Center, the International Brotherhood of Teamsters, Americans for Financial Reform, Demand Progress Education Fund, Public Citizen, the Revolving Door Project, Warehouse Workers for Justice, Main Street Alliance, Consumer Action, and Demos, point to the SIFMU designation as a means of holding AWS to appropriate standards to protect the public from financial instability—such as requiring the company to prioritize the stability and safety of the financial system over risk-taking and short-term private profit.

“We shouldn’t need another world-shaking outage to hammer home to our leaders that digital platforms like Amazon Web Services (AWS) now function as critical market utilities. In fact, such an AWS outage has the potential to shipwreck financial systems across the globe. Our financial regulators are sitting on a simple solution to at least this threat from AWS— they should seize the opportunity,” said Brian Callaci, Chief Economist, Open Markets Institute.

The letter builds on both a 2019 letter from Reps. Nydia Velázquez and Katie Porter, calling on the FSOC to consider SIFMU designations for Amazon AWS, along with Microsoft Azure and Google Cloud, and the 2020 paper, “Banking on the Cloud” in the Tennessee Journal of Business Law.

“Banks themselves rank cyberattacks as among their chief risks. Increasingly, financial information exists in the ‘cloud,’ and that cloud increasingly means Amazon Web Services, a clear target for cyber thieves. Surely, financial stability requires that this mammoth business be overseen with the specialized care of the Financial Stability Oversight Council and designated a systemically risky institution,” said Bartlett Naylor, financial policy advocate, Public Citizen.

"Amazon Web Services has come to dominate the domestic cloud services market and is now an essential utility to banking institutions — and recent massive Amazon data breaches underscore the risks that concentrated reliance on these services could pose to the stability of the U.S. financial system. Designation of Amazon Web Services as a SIFMU will help to ensure that the company makes responsible choices that protect the broader public good and long term financial stability. This designation will ensure that AWS is given proper oversight by authorities that are knowledgeable about financial markets," said Ginger Quintero-McCall, Legal Director of Demand Progress Education Fund.

“The global financial system is increasingly reliant on Amazon Web Services’s (AWS) cloud-computing capabilities, and Amazon’s dominance of the sector presents an enormous vulnerability to the financial system,” said Stacy Mitchell, co-director of the Institute for Local Self-Reliance. “With so much at stake, we need regulators to keep a close eye on AWS. We urge U.S. banking regulators to take these potential harms seriously by designating AWS as a Systemically Important Financial Market Utility (SIFMU).”

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Download the full letter here or see below.