The market is forcing cloud vendors to ease data egress charges.

Image credits: IR_Stone/Getty Images

In recent months, the three major cloud vendors – Amazon, Microsoft and Google – have eased egress fees, a type of tax that cloud companies charge customers when they move data from one vendor to another. While this is a way to retain existing customers, it’s somewhat amateurish and doesn’t exactly foster goodwill.

With many factors at play, including the realities of a multi-cloud world, an increasingly stringent regulatory environment, and consumer pushback, these companies are reluctant to ease their rates, albeit with a number of caveats and caveats. They are beginning to realize that their methods are wrong. There will be some friction. For example, there are limits to the types of data that can be moved, and each limit requires you to contact your vendor and initiate a request to retrieve your own data from the cloud. But at least it’s a start.

John Dinsdale, chief analyst and managing director at Synergy Research, a firm that tracks the cloud infrastructure market, says this change of heart is actually a recognition of changing market dynamics. “I think this is a natural progression of the market. It’s not good for cloud providers to be seen as overly protectionist when real competition is increasing,” Dinsdale told TechCrunch.

“Giving customers what they want is just the right business strategy. In the IT world over the last few years, legacy companies that tried to cling to the old ways have not fared well,” he said. .

And Jake Graham, CEO and co-founder of Bobsled, a startup that helps customers move data between clouds, said: “It’s clear that we’re moving into a multi-cloud world. “Now more than ever, it’s important to eliminate friction when it comes to moving data.” His role puts him at the forefront of this issue.

“In the original cloud world, the three big cloud vendors were really fighting to build something like a walled garden. Everything was great as long as you built on top of it. But… It was really hard to get through those,” Graham said. “We’re starting to see a lot of backlash from business customers, who say there’s no world in the world where global companies aren’t using multiple platforms.” These fees create a huge barrier to moving data and sharing it with customers. It also makes it difficult to share information even within departments within the same company, he says.

Rudina Seseri, founder and managing partner at Glasswing Ventures, says this change is partly due to regulatory pressure, but it’s not the only reason. “Broadly speaking, the advent of this regulation is a very simple explanation for the sudden change in behavior,” she says. “But I think it’s also worth pointing out how such a language switch works preemptively and how Google has used it as a marketing tool against Azure. “If we view obsolescence as inevitable, Google certainly has a first-mover advantage in portraying itself as a ‘less restrictive’ cloud and attracting early-stage customers,” she said.

“Metaphorically speaking, the market dynamics are shifting back from sticks to carrots. Cloud customers looking to switch providers now need innovative and accessible services as egress penalties are phased out. We need to maintain this through easy-to-use features,” said Ceceli.

Long-time cloud consultant David Linthicum says the recent announcement is a nice PR move, but warns people to look at their bills carefully, as egress charges aren’t the only issue. “While this is a pleasant surprise, it doesn’t necessarily have significant consequences. Customers need to consider costs holistically,” Linthicome told TechCrunch. “In other words, what are we paying for the services we use? Network charges, egress charges, cloud charges and other hidden charges called junk charges from vendors, we What exactly are we paying for?”

However, this may not have as much of an impact on startups as it does on larger enterprise customers. “The cloud ecosystem has many moving parts beyond just storage, such as services needed for scaling and security, and the largest companies have built tight infrastructures that are difficult to loosen.” said Cecely. “However, the start-up experience will certainly improve as providers need to focus more on innovative features and improved customer satisfaction to win long-term loyalty.”

Graham, whose primary job is helping people move data, believes his entire business model will be affected by these fees. He said the recent changes are a small but important step, but in the future it will become increasingly difficult to determine what is and is not an egress fee, leading to the eventual elimination of egress fees. I also see it as a possibility.

Because migration takes time. It’s not a neat division like, “I used to be on AWS, now I’m on GCP.” This is a time-consuming process that can take years, where the data sources that need to communicate reside in both clouds for a period of time. At the same time, his original cloud vendors are working hard to change customers’ minds and come back, making it an impossible balance for these companies to strike, he said.

“It’s going to be a battle between teams trying to get customers back and make them happy, and another group saying, ‘Wait a minute, we’ve already lost this customer.’ You have to charge them everything. Why give them preferential treatment? ”

As data becomes more valuable in the age of AI, the ability to move and leverage data becomes increasingly important for everyone. Cloud vendors would be far better off getting ahead of this trend than creating barriers that make it difficult to move data. Perhaps this is just the beginning of something bigger.