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Despite Google Cloud's elimination of egress fees for companies leaving its cloud, cloud providers are likely to continue charging customers to move around their data both between regions and clouds
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Egress fees could become a problem for companies chasing GPU availability for AI processing
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Oracle charges less than its larger rivals, but others still have lower or even no egress fees
Though Google Cloud made a big show of eliminating egress fees for customers exiting its cloud platform, it seems charges for day-to-day transfers on Google Cloud – and AWS and Azure for that matter – aren’t going anywhere. So, who charges what? And does this issue really matter?
Taking the latter question first, the answer is a resounding “yes.” According to a 2021 whitepaper by IDC, a whopping 99% of cloud storage users reported incurring planned or unplanned egress fees and 41% said they were charged at least two or three times per year.
These fees amounted to roughly 6% of an organization’s cloud storage bill, IDC found. So, in a world where cloud costs are increasingly coming under scrutiny, egress fees are a prime target.
The AI intersection
There’s also the issue of how egress fees will intersect with trends around artificial intelligence (AI).
AvidThink’s Roy Chua noted that AI generally involves a lot of data ingress but not too much egress. The exception to the rule would come if enterprises look at shifting their AI assets either across clouds or across regions on a single cloud.
“If organizations are moving large training data sets around between clouds, or between regions to capture GPU availability or find the cheapest compute, they could incur egress fees. In this case, egress fees push customers towards sticking with a single cloud/region for their AI/ML workloads which reduce flexibility but may be what the cloud provider wants,” he explained.
Did you catch that? The bit about GPU availability? Yeah, given the lingering effects of 2023’s GPU shortage, that could be a problem.
Cloudflare (which has admittedly long been a vocal critic of egress fees) told Silverlinings that the need to chase GPU access could drive up egress costs.
“It’s imperative for AI companies to move data around to train their models on these hard-to-find GPUs, and fees from big cloud providers to do this can drive up the underlying costs by as much as double,” Rita Kozlov, Senior Director of Product for Cloudflare’s Developer Platform, said. “If egress fees went away, these upfront costs to develop and use large AI models would go down and consumers would likely see more AI tools from different providers.”
So, what kinds of fees could companies run up against? Well, egress fees are variable depending on where the data is being transferred to and from, and how it is moved (i.e. the public internet or a private connection).
Since 2021, Amazon has offered the first 100GB of data egress from its S3 service for free. A company representative recently told Silverlinings this completely eliminates egress fees for more than 90% of customers. Microsoft also offers the first 100GB of internet egress for free and charges rates that start at 8 cents thereafter for transfers out of North America and Europe to any destination over the public internet.
Google Cloud, meanwhile, offers free egress up to 200 GB for customers on its Standard Tier pricing and charges 8 cents or less thereafter. However, it noted on its website that Premium Tier pricing is the default for customers (including those on its free trial). Egress fees on that tier start at 12 cents for up to a TB of data. And Google recently noted it actually plans to increase fees for certain egress transfers as of February 1.
Chinese cloud giant Huawei offers 1 GB of free egress per day and charges 12 cents per GB thereafter as part of its pay-as-you-go plan.
What's in an egress fee, anyway?
Digital Ocean includes 500 to 11,000 GB of outbound bandwidth costs in its monthly pricing plans for droplets and charges 1 cent per GB for data egress over a public connection beyond the included amount.
Meanwhile, cloud storage provider Wasabi charges no egress fees at all. Similarly, Cloudflare provides object storage with no egress fees on its R2 service.
Oracle is somewhere in between these two extremes. Leo Leung, VP of OCI and Oracle Technology, told Silverlinings “Oracle does not charge data egress fees within a single region, while the other cloud providers loudly tout best practices to place workloads in multiple availability zones within each region – which then incurs data egress fees as data moves between zones for replication and synchronization,” he said.
Leung said the “biggest delta between Oracle’s and competitors’ data egress fees is found when sending data to the general internet. In addition to significantly lower pricing, Oracle includes the first 10 TB per month for free.”
That’s significantly more than the 100 GB AWS and Microsoft offer and means “the vast majority of customers are unlikely to pay anything to move their data from OCI.”
At the end of the day, egress charges are a question of strategy that each cloud service provider needs to decide, he said.
Lower costs can be a competitive advantage, but higher margins can help subsidize other areas of the business, he concluded.