Its business margin may have declined based on the latest quarterly earnings, but, Inc. (AMZN) is still king of the cloud.

According to the latest report from research firm Canalys, the Seattle-based e-commerce behemoth dominated the global cloud infrastructure market last year with a 33.8% share. That figure is more than the 30.8% combined share of the next three market players – Microsoft Corporation (MSFT), Alphabet Inc. (GOOGsubsidiary Google and International Business Machines Corporation (IBM). On an overall basis, the market for cloud infrastructure, which enables companies to rent server space, grew by 49% to $10.3 billion during the fourth quarter of last year. The market is expected to reach $55.8 billion in 2017, which would equate to growth of 46% compared with 2016 figures. (See also: Amazon Leads Cloud Services by a Wide Margin.)

According to Daniel Liu, Canalys research analyst, customer demand and strict data sovereignty laws are responsible for growing demand for cloud services. He cited Europe's privacy laws, which require storage of personal data in facilities located within the country, as an important driving factor for cloud adoption. For tech companies, these laws are a mixed blessing. Even as they require increased oversight and restrictions on data practices, the laws have also meant more business for these companies. For example, Microsoft has spent nearly $3 billion on developing new facilities in Europe for its cloud products, such as Office365. The region also accounts for 22% of Amazon's global data center footprint. (See also: Tech Behemoths Ramp Up Cloud Presence in Europe.)

But Amazon may want to hold off on the bubbly. During its latest quarterly earnings report, the company missed analysts' estimates for its revenue and reported a decline in margins for its cloud business. (See also: Amazon Tumbles After-Hours on Revenue Miss.)

Analysts, who have forecast exponential growth for Amazon in the coming years based on increased margins from its cloud business, among other factors, were surprised at the company's figures for its cloud division. "This is the first time we can recall that AWS (Amazon Web Services) revenue has missed Street numbers," wrote RBC Capital Markets analysts, adding that a "likely" explanation for the miss could be price cuts that the company instituted in response to competition during the quarter. With the entry of other players such as Alibaba Group Holdings Limited (BABA) into the cloud market and the growing commoditization​ of cloud services, further price cuts could take a toll on Amazon's market share in the industry. (See also: How Alibaba's Cloud Stacks Up to Microsoft, Amazon.)