Hyperscalers recently eliminated exit fees for cloud customers, but egress fees remain an issue
Egress fees from everyday data movement can amount to 10-15% of customer cloud bills
Upcoming regulatory deadlines could reignite the conversation around egress fees
Amazon Web Service (AWS), Google Cloud and Microsoft have all scrapped egress fees for customers leaving their cloud platforms. That means the conversation about egress fees is over, right? Right?
Wrong.
“There’s not a charitable angle to what hyperscalers are doing because it was forced on them” by regulators in the European Union, Chris Opat, SVP Cloud Operations at cloud storage provider Backblaze, told Silverlinings.
According to Opat, exit fees are “not reflective of daily use. On a daily use basis, if you’re a permanent customer of AWS or the others, the price of egress has been constantly at that high level it’s been at and that’s shocking.”
The high level Opat is referring to is an estimate from Cloudflare that AWS customers in the U.S. and Europe pay 80x Amazon’s cost for egress. Though the analysis is admittedly old, Opat said AWS hasn’t changed its prices since Cloudflare posted its findings in 2021.
It’s worth noting that Cloudflare has been a vocal opponent of hyperscale egress fees, and even BackBlaze has a horse in the race when it comes to trying to convince users that hyperscale egress fees are too high. But they’re not the only ones that have highlighted how high these everyday costs are and how quickly they add up.
Sid Nag, VP in Gartner’s Technology and Service Provider Group, told Silverlinings “full exits constitute a very small percentage of egress fees.” Instead, he said, the majority of egress fees stem from “data moving between multiple clouds.”
As Gartner explained in a September 2023 report, “putting a web file into an object storage bucket from one of the major hyperscalers and then serving it ‘back out’ to internet users may generate a data egress cost up to four times the plain storage costs.”
And these fees can quickly stack up. The same Gartner report noted the analyst firm has “observed that most clients spend 10% to 15% of their cloud bills on egress costs.” Opat said he’s heard of instances where egress fees account for upwards of 40% of customer bills.
It’s not over until it’s over
AvidThink Founder Roy Chua said there will likely be a “lull” in conversations about egress fees in the wake of the recent hyperscale moves, and those providers are probably hoping regulators “will be appeased” by their moves to scrap exit fees. However, he noted that there are a few upcoming deadlines that could reignite the discussion and prompt more changes.
One of those is the expected conclusion of the U.K.’s cloud competition probe, which launched last year, by April 2025.
“Another possible window for more changes will be three years after the initial enforcement (Jan 2024) of the EU Data Act, when cloud providers cannot impose any switching charges on enterprises,” he said.
Nag agreed it’s not over till it’s over.
“Egress fees will still remain an issue until public cloud providers completely eliminate all egress fees. However, given the associated network costs – that is unlikely,” Nag stated.
What’s the alternative?
There are a handful of alternatives to hyperscale storage for those looking to skirt egress fees. Neither Backblaze nor fellow cloud storage provider Wasabi charge egress fees. And Cloudflare provides object storage as well with no egress fees on its R2 service.
Backblaze doesn’t offer services in addition to storage in the same way the hyperscalers do (though it does have ecosystem partnerships with the likes of CoreWeave and Vultr). But Opat said its value add is the fact that it doesn’t want to constrain how and where customers use their data.
He noted it recently signed a large media company with 22 million customers. Moving its storage to Backblaze is saving the company $800,000 a year in egress fees alone.
At the heart of Backblaze’s argument is a push for an open cloud ecosystem that allows customers to choose best-of-breed storage, compute and database services rather than being locked into hyperscale gardens by egress fees.
But for all customers hate egress fees, Chua said they’re not a driving factor for cloud decisionmaking.
“The public/private cloud market dynamics will be less driven by fees and egress charges than workload evolution of the enterprises and the carriers,” he explained. “If AI/ML workloads start dominating more, then workload fit for AI will drive selection of cloud providers.”
Nag added that providers like Backblaze and crew are still a very minor part of the market.
“These providers don’t carry the same amount of traffic as the public cloud providers. So, I am not sure they can influence or address this issue in any meaningful way at this time,” he concluded.