- Data release charges could become a thing of the past, analysts told Insider.
- Cloud giants are under pressure to allow open computing environments where customers can use multiple clouds.
- Customers are also asking for more price transparency as their cloud costs rise.
There are growing signs that Amazon’s next big cloud battleground is data egress fees, the notorious fees that cloud providers like Amazon Web Services, Microsoft Azure, and Google Cloud charge customers. to remove data from their platforms. Oracle and Cloudflare both stepped up the fight against exit fees last week, separately attacking AWS for the practice in an apparent attempt to capitalize on customer frustrations.
These fees are seen in the industry as serving an important business purpose for the Big Three cloud providers, who typically don’t charge customers anything, in most cases, to import data into their clouds.
“This is exactly what all cloud providers want you to do because they want to have your data fast,” Databricks CEO Ali Ghodsi recently told Insider. “They’re at war with each other, so they want to have all of your data as fast as possible because that data has gravity. And if they don’t get your data, it’s kind of over. “
This is precisely why the fees exist, according to some: “The point of the egress fee was to lock your data and make it difficult to retrieve it, to move it elsewhere,” said Adam Ronthal, vice president of research at Gartner.
This type of cloud “lockdown” has long been a frustration for customers. While Oracle and Cloudflare have singled out AWS for their reviews, other cloud providers like Microsoft, Google, and Oracle itself all charge exit fees at different rates (though Oracle insists its fees are among the lowest). And because of the strategic importance of fees to suppliers, they have been generally accepted by many customers as just an additional cost of doing business.
But things are changing in the industry, experts say, as cloud providers come under pressure to rethink their billing model, including these fees. In recent years, customers have also started to embrace trends such as multicloud, where businesses use multiple cloud providers for their IT infrastructure, and hybrid cloud, where users combine cloud platforms and their own data centers. data.
Multicloud is popular for allowing customers to choose the service they want from each provider, while hybrid cloud allows users in highly regulated industries like finance or healthcare to keep their data local. Customers are flocking to multicloud in particular, it seems: Gartner’s most recent cloud buying adoption survey, conducted last year, found that 76% of companies surveyed are using more. a cloud provider.
Even the cloud providers themselves get it. Over the past few years, Amazon, Microsoft and Google have all taken steps in recognizing that businesses increasingly want to use multiple cloud providers, or a merger of cloud platforms with their own data centers or a private cloud.
But, crucially, that future depends on the ability for data to flow freely in and out of clouds like AWS. This makes data egress costs, already unappreciated by customers, a significant barrier between the IT infrastructure they have and the one they want.
At the same time, emerging from a mad rush to adopt the cloud during the pandemic, businesses are facing growing questions about the cost of their cloud investments. Exit fees, in particular, make it difficult for companies to forecast their cloud bills from month to month, David Linthicum, director of cloud strategy at Deloitte, told Insider.
“Your ability to somehow avoid this surprising cloud bill will always be on the minds of the IT people who operate it,” Linthicum said.
This, in turn, puts more pressure on cloud providers to justify their pricing models and fees, and could help the industry move towards greater price transparency, analysts say. In fact, with multicloud and hybrid cloud growing in popularity, some say it won’t be long before market forces agree to eliminate data egress charges altogether.
Google Cloud will likely be the first to lower its exit fees, Ronthal predicted, partly because of its third place behind AWS and Microsoft in the cloud market, and partly because it “took a much more open stance. “.
Richard Seroter, director of outbound product management at Google Cloud, told Insider he was not sure there would be a “race to zero” on exit fees. “I don’t think we have a position yet on where we are heading, but neither do we see the network as just stupid pipes,” he said.
But analysts still see Amazon, Microsoft and Google as meeting the demands of an ever-changing market. when it doesn’t, ”said Ronthal. In other words, if they can’t keep clients glued to their clouds, they’ll have to compete by being better at supporting multicloud.
Indeed, Oracle – widely seen as lagging behind the Big Three cloud providers despite having made strides in the market – is already looking to turn the problem and adoption of multicloud into a winning bid against AWS.
“Multicloud is the new normal,” said Ariel Kelman, Oracle chief marketing officer and former director of AWS, in an emailed statement to Insider. He also said that Amazon’s exit fee is designed to keep customers locked in its cloud, calling it an approach that “makes sense if you think customers need to run all of their workloads on your cloud.” .
“At Oracle, we don’t think that way,” he added. “We believe customers should be free to run their workloads across multiple clouds.”
Amazon has not commented directly on its release charges, and Microsoft declined to comment for this story.
Google Cloud said adopting other platforms is its competitive advantage as well: “I think we’ve been quite unique in recognizing that we’re not the center of the customer’s universe. No cloud provider is not. is, ”Seroter said.
“Hopefully all roads lead to Google Cloud, but until then I’ll make sure we’re where they need us.”