Google Cloud removes public cloud egress fees

The US cloud service has stopped charging its customers fees for migrating their data to another cloud provider or to an on-premises site. In doing so, it becomes the first US cloud player to eliminate the controversial “egress fees” for its customers.

GCP customers can freely leave Google cloud at no cost

Customers using Google Cloud services, including BigQuery, Cloud Bigtable, Cloud SQL, Cloud Storage, Datastore, Filestore, Spanner, and Persistent Disk, can take advantage of free transfers outside of Google Cloud starting today. The only prerequisite is to request authorization through an online form

GCP customers will have 60 days to transfer their data after approval. If this deadline is exceeded, they will need to submit a second request.

Data transfer fees will only be waived, via a credit on the invoice, once an approved customer's data has been transferred out of Google Cloud and they have terminated their written agreement with Google Cloud. Of course, Google reserves the right to have the final say.

In a technical support article, the company states that it reserves the right to verify data transfers outside of Google Cloud “to ensure compliance with the program's terms and conditions.”

Cloud exit fees at the heart of the controversy

In the cloud computing market, egress fees are the focus of criticism from regulators and competing public cloud providers.

These egress costs vary depending on a number of factors, such as the destination, the data source, and the volume of data.

For example, for egress data to the public internet, AWS charges $0.09 per gigabyte of data for the first 10 terabytes. In comparison, data transfer between two AWS EC2 instances located in different regions is charged at $0.02 per gigabyte.

In fact, according to Google, the cost of transferring data from the cloud to a private data center or on-premises site can range from 5 to 20 cents per gigabyte.

These costs can be prohibitive for public cloud customers who switch to other providers. Apple reportedly paid AWS $50 million in egress fees in a single year.

In 2018, Cloudflare launched the Bandwidth Alliance, a group of companies committed to reducing or eliminating data egress fees. Google is among the members of this group, along with Alibaba, Microsoft, and Oracle, but AWS is not.

Google's announcement comes as several regulators are looking into potentially anti-competitive practices in the industry. Several complaints have also been filed.

Google has appealed to the European Commission and the Federal Trade Commission, the US antitrust regulator.

Locked-in risks

Last summer, the French Competition Authority identified termination fees as one of the risks of customer lock-in. In particular, it emphasized that their amount was “disconnected from the costs directly incurred by suppliers.”

Last October, the UK Competition and Markets Authority took similar action, announcing that it would launch an investigation into the exit fees charged by public cloud providers, including AWS and Azure, as well as how these providers might hinder cloud interoperability or impose restrictive software licenses.

This view is shared by Ofcom, the UK telecoms regulator. In a recent report, it targeted Amazon Web Services and Microsoft Azure, the two market leaders, accusing them of charging egress fees 5 to 10 times higher than other players.

Amazon Web Services and Microsoft Azure have been accused by the UK regulator of charging egress fees 5 to 10 times higher than other players.

Since then, the Competition & Markets Administration, the UK competition authority, has launched a preliminary investigation into the two US hyperscalers.

Drawing attention to a “fundamental problem”

Google's decision may seem contradictory: by eliminating exit fees, it could encourage customers to leave for its competitors. In fact, it is part of a communication strategy aimed at drawing attention to “the fundamental problem that prevents many customers from working with the provider of their choice from the outset,” says Amit Zavery, general manager of Google Cloud.

The manager condemns “restrictive and unfair licensing practices” implemented by “certain long-standing suppliers who exploit the monopoly of their on-site software.”

He does not give any names in his message. But he specifically targeted Microsoft and Oracle in his complaint filed with the FTC.

Google Cloud accuses Microsoft of taking advantage of the dominant position of its Office 365 suite to “lock in” its customers to its cloud services. The Redmond giant is said to be engaging in tied sales of its Azure offering with its office suite, as well as with its Windows Server operating system.

This practice would result in very high additional costs for businesses, with “bills five times higher if customers choose to use certain competing clouds,” says Amit Zavery.

The company also criticizes technical restrictions that “limit the interoperability of essential software with the cloud infrastructure of competitors.”

In lign with the European Data Act

All public cloud service providers operating in Europe could eventually be forced to stop charging egress fees under the European Data Act recently adopted by the European Union. This law requires the gradual reduction of switching fees, including data egress fees, over the next three years, while providing exceptions for multi-cloud contracts. Google Cloud is therefore playing a strategic card in line with upcoming regulations.