We have to hope they never form a sort of cartel or join an informal alliance. Until now we are really getting a lot of benefits due to this competition
I can't help but think that they already were in a sort of informal alliance.
It took Google dropping prices for both AWS and Azure to drop... clearly they were both skimming profits off the top for the last while.
Of course, a company does need to profit and I'm not accusing either of them of doing anything wrong, I'm just trying to say that these sorts of alliances form accidentally and naturally; both companies hit a competitive price and then hardware gets cheaper; software gets better... they could drop prices, but why cut into profits when there's no need? Inertia is a powerful force. It takes something actually happening to kick those price drops into action, generally.
> these sorts of alliances form accidentally and naturally
The airline-ticket market is kind of fascinating to watch from that perspective. On directly competing routes major carriers often end up with the same fares and matching each others' moves, but the exact process of who leads and who follows is complex. There is all kinds of informal signalling where companies attempt to figure out the others' intentions without directly colluding. For example, a company might trial a $50 fare increase in response to increasing costs, and hope others will match it. If others don't, they might be forced to roll back the increase to avoid losing market share, admitting the trial was unsuccessful. It's in effect an offer of, "hey everyone, I think we should raise prices $50 on this route, do you match?", followed by "ok, I guess not, retracting" if they don't, but not explicit.
If that were to happen there is nothing stopping new market entrants from quickly gaining market share simply with lower prices.
DigitalOcean has done this to some extent (although it is unclear how much of their pricing relies on venture funding and generous payment terms for hardware/data centers space combined with rapid growth.)