The public cloud computing world has reached a new stage of evolution. The hyperscalers are essentially being forced to remove the shackles of egress fees and compete on differentiators. The question now is, when will Microsoft Azure join the club?

Kelly Teal, Contributing Editor

March 6, 2024

4 Min Read
AWS removes egress fees
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Amazon Web Services typically isn’t a follower but, reading the writing on the wall around controversial cloud egress fees, has imitated rival Google Cloud in removing those charges.

On March 5, the world’s largest public cloud computing provider wrote in a blog that, “we’re waiving data transfer out to the internet … charges when you want to move outside of AWS.”

The news comes two months after Google Cloud started what’s expected to become a trend among the hyperscalers. Most indie cloud computing providers already eschew egress fees as part of their strategies to attract customers. Thus, if one hyperscaler enacts something so significant as the axing of egress fees, the rest can only be expected to join the movement. Not doing so, frankly, can reflect poorly on outliers. Now, of course, everyone is waiting to hear from Microsoft Azure and any decisions it’s considering around cloud egress fees.

AWS’ decision also looks to have been spurred by European Union directives (and Google Cloud’s was, as well, per industry speculation). The recent European Data Act enforces measures including letting customers “switch seamlessly (and eventually free of charge) between different cloud providers.” In addition, the UK’s Ofcom had started investigating cloud egress fees, putting pressure on the likes of AWS, Google and Azure.

Related:Cloud Egress Fees Out the Door at Google Cloud, Broadcom Bids Adieu to VMware Campus

Note that AWS insisted it already didn't charge egress fees to “over 90% of our customers.” That’s because the provider says it allows 100 gigabytes per month free from its data centers to the internet.

“If you need more than 100 gigabytes of data transfer out per month while transitioning, you can contact AWS Support to ask for free … rates for the additional data,” AWS said. “It’s necessary to go through support because you make hundreds of millions of data transfers each day, and we generally do not know if the data transferred out to the internet is a normal part of your business or a one-time transfer as part of a switch to another cloud provider or on premises.”

There is a caveat, though. 

“We will review requests at the AWS account level,” AWS wrote. “Once approved, we will provide credits for the data being migrated. We don’t require you to close your account or change your relationship with AWS in any way. You’re welcome to come back at any time. We will, of course, apply additional scrutiny if the same AWS account applies multiple times for free [data transfer].”

Removing Cloud Egress Fees: A Sign of Industry Evolution

At a high level, the removal of egress fees marks a turning point in the evolution of public cloud computing. The hyperscalers must compete on differentiators, not on how many organizations they might hold hostage through cost fears. 

Mark Boost, CEO of Civo, an independent cloud provider in the UK, agreed.

Civo's Mark Boost

“The cloud is broken,” Boost said. “The hyperscalers have not delivered on their lofty promises of low costs at scale that they set out more than a decade ago, complicating their offerings with convoluted pricing they are now backtracking on only due to regulatory pressure.”

Removing egress fees constitutes “a step in the right direction,” he added, but it’s only part of the equation. 

Unnamed Civo research cited by Boost “found that 64% of users of the ‘Big Three’ observed an increase in cloud costs in the last 12 months. This situation can be hugely damaging, especially for smaller businesses, making it very difficult for them to build a bespoke, affordable approach to cloud that suits their needs.”

To be sure, moving among cloud environments entails much more than footing egress costs. As cloud consultant Vitaly Karasik wrote on LinkedIn in response to the AWS news, “IMHO, these announcements are just PR. Even if it's a lot of money, I don't believe that someone will decide to leave or to stay based on it. The cost of migration is an order of magnitude more than just egress.”

Again, though, taking egress fees off the table indicates that the public cloud computing space is growing. For channel partners and their customers seeking flexible options tailored to their business size, location and budget, the shift is critical.

“Cloud should be about empowering IT teams to experiment and innovate using the technology, finding the services they need, and paying a fair price for them,” Boost said. “With this new approach, the cloud can become what it always had the potential to be: an incredible engine of equity in technology, leveling the playing field and ensuring anyone can access cutting-edge tech to innovate and build a successful business.“

About the Author(s)

Kelly Teal

Contributing Editor, Channel Futures

Kelly Teal has more than 20 years’ experience as a journalist, editor and analyst, with longtime expertise in the indirect channel. She worked on the Channel Partners magazine staff for 11 years. Kelly now is principal of Kreativ Energy LLC.

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