Cloud Federations: Economics, Games and Benefits

Sharing economy is a game-changing business paradigm that is currently permeating several industrial sectors. This paper aims to build a fundamental theory of the sharing economy of the computational capacity resource of Cloud Service Providers (CSPs). CSPs aim to cost-efficient serve geographically dispersed customers that often request computational resource-demanding services. The formation of CSP federations arises as an effective means to manage these diverse and time-varying service requests. In this paper, we introduce innovative federation models and policies for profitable federations that also achieve adequate QoS for their customers. Taking in account the flexible cloud computing service model, we abstract the virtualized infrastructure of each CSP to an M/M/1 queueing system, we formulate the CSP revenue and cost functions, and we study the task forwarding-based (TF) and the capacity sharing-based (CS) federation approaches. Under TF, each CSP may forward part of its workload to other federated CSPs, while under CS each CSP may share parts of its computational infrastructure with others. For both approaches, we propose two operation modes with different degree of CSPs’ cooperation: $(i)$ the joint business mode, where the CSPs fully cooperate: they jointly decide on the federation policies that maximize the total federation profit which is shared fairly among them; $(ii)$ the reward-driven mode, where self-interested CSPs participate in a game: they adjust their responses to federation policies aiming to maximize their individual profits. The results reveal that our policies lead to effective federations, which are beneficial both for CSPs and for customers.