Why public cloud providers are cutting egress fees
Public cloud providers are often loathed for charging data transfer or “egress fees” for removing data from a specific cloud provider. If you move data out of a cloud provider, there’s a cost; for instance, you move inventory data from an inventory system residing in a public cloud provider to a supply chain system on premises or perhaps even on another public cloud provider.
This is the number one complaint about cloud providers that I hear. The fee is thought of as arbitrary and counterproductive to using the cloud with systems that exist outside of a specific provider. In some cases, it’s a reason applications are not in a cloud today.
The writing on the wall
This customer discontent is not lost on cloud providers, who are initiating a significant shift in their pricing strategies by reducing these charges. Google Cloud announced it would eliminate egress fees, a strategic move to attract customers from its larger competitors, AWS and Microsoft. This was not merely a pricing play but also a response to regulatory pressures, greater competition, and the significantly lower cost of hardware in the past several years. The cloud computing landscape has changed, and providers are continually looking for ways to differentiate themselves and attract more users.
Today the competition is not only other public cloud providers but managed service providers (MSPs) and regional cloud services. Microclouds are also emerging, driven mainly by generative AI and the need to find more cost-effective cloud alternatives for using GPU-powered systems on demand.
Changing governmental policies and market demand also put pressure on providers to remove or reduce these fees. The best example is the European Data Act, which is aimed at fostering competition by making it easier for customers to switch providers.
Moreover, in the evolving market, users are increasingly seeking cost-effective and efficient cloud solutions. Recently, the cost of cloud has come under scrutiny with enterprises not at all happy with the high cost of public cloud services that were originally sold to them as a cost-reducing technology. Not so much.
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