Google is cutting his Cloud Egress Transfer Costs
Google Cloud Provider (GCP) announced in January 2024 that they are removing any egress/outbound costs for any customer leaving their platform.
While Cloud-exit enthusiasts are seeing this as a victory, I would like to think of it as an opportunity to reason behind this cost enforced by Cloud Providers (CPs), which can almost be seen as a racket tax.
Egress transfer costs are fees charged by CPs when data is transferred out of their network.
Examples of such costs are any outbound data transfer involving intra/extra-region/Availability zone/public internet traffic, such as downloading files, accessing storage/compute components, and consuming API in a hybrid (on-prem/cloud) setup.
It is a complex matter to have a good grasp on it:
While these costs might seem trivial at first, they can add up significantly for businesses with substantial data transfer requirements, as below Holori study below suggests:
This issue has led to an unheard-of call for cloud providers to consider removing or at least mitigating egress transfer costs.
Why is GCP doing this?
Well, only Google knows :==). My theory is that Google did not become suddenly philanthropic, but rather:
1. Reduce other CPs’ Market share
Wants to steal market share from AWS and Azure, given his distant third position as Cloud Vendor is hard to reduce, pushing customers to revisit their Cloud-exit strategies against any Cloud vendor.
2. Anticipate regulations on egress costs
GCP may see egress transfer costs as being an object of future regulations, thus working towards it to anticipate any complaints from regulators and/or customers.
3. Trigger other CPs’ reactions
GPC wants to stir the pot and see the reactions of customers and CPs on such news, given such a topic has been one of the first dividing the cloud community.
Nevertheless, if we look at such costs from a mere “money” argument, we may lose the overall picture. Let’s see 3 reasons why the costs should stay and why they should be reduced/removed.
Reasons to keep the egress costs
1. Sustainable CPs’ infrastructure maintenance
It’s important to acknowledge the challenges that CPs face in maintaining their infrastructure and services. The revenue generated from egress transfer costs contributes to the ongoing development and maintenance of robust cloud ecosystems.
2. Lock-in customers
This is a natural lock-in strategy. Once customer data is in the cloud, CPs want you to pay a lot to get out of them. While this strategy pays off for CPs to prevent customers from leaving the cloud easily, it severely affects migrations towards it, as the potential costs will scare initiatives to adopt and invest in cloud workloads.
3. Educate customers on well-architectures
High fees can discourage excessive or inefficient use of network resources and may encourage customers to store and process their data within the cloud provider’s ecosystem, promoting a “cloud-native” approach. By keeping data within the CP’s data centres, users can potentially reduce egress costs and take advantage of lower-latency access to other cloud services, when possible.
Reasons to remove/drastically reduce the costs
1. Free flow of data
Fostering innovation and encouraging the free flow of data is becoming crucial in organizations. Businesses thrive when information is accessible and can be shared seamlessly. Egress transfer costs act as a deterrent to this open exchange of data, hindering collaboration and innovation. Removing these costs would encourage businesses to leverage the full potential of the cloud without concerns about the financial implications of data leaving the cloud environment.
2. Earn Trust towards their customers
The removal of egress transfer costs aligns with the principles of fairness and transparency. As businesses choose CPs based on various factors (storage, compute, network), the additional cost of transferring data out of the cloud can be an unexpected financial burden.
Moreover, calculating these costs is not simple. Transferring data from an EC2 instance out to the public internet in the Ireland region incurs these costs:
Typically one uses Cost Explorer to look at those costs for both EC2 and VPC Flow logs data transfer, but it is not ultra-intuitive and transparent:
By reducing/eliminating these costs or building tools to make this even more clear, CPs can build trust and create a more equitable pricing structure for their users.
3. Data-driven decisions in a hybrid setup
Another critical aspect is the impact on data-driven decision-making. Egress transfer costs can discourage businesses from moving large datasets, limiting their ability to analyse and derive valuable insights from their data.
This is particularly relevant in big enterprises, which often, in a hybrid setup, have hard constraints and long migration efforts to deal with data efficiently.
By removing these costs, CPs can empower businesses to make the most of their data, ultimately driving better decision-making and strategic planning.
Conclusion
This debate has been around for several years now.
Has it now come the judgment day for CPs to take this seriously and consider modifications to their egress transfer costs strategies?
I hope that this announcement triggers a certain reaction in the remaining major CPs to understand the implications of such costs, and who knows, maybe use it as an opportunity to be the undisputed leader in cloud computing offerings.
