Market forces cloud vendors to ease data egress fees | Tech Crunch

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In recent months, the big three cloud vendors — Amazon, Microsoft and Google — have eased their egress fees, which are taxes that cloud companies charge customers to move their data to another vendor. It's a way to keep existing customers in the fold, but it's kind of a hand-me-down that certainly doesn't foster goodwill.

With the reality of a multi-cloud world, a tough regulatory environment and consumer backlash coming into play, these companies are starting to see the error of their ways by relaxing these fees, but there are many exceptions and a bit of friction involved. For example, there are limits to the type of data you can move, and for everything you need to contact the vendor and open a request to get your own data from the cloud. But at least it's a start.

This change of heart is truly a recognition of changing market dynamics, says John Dinsdale, chief analyst and managing director at Synergy Research, a firm that tracks the cloud infrastructure market. “I think it's a natural progression of the market. As real competition heats up, it's not a good idea to see cloud providers as overly protectionist,” Dinsdale told TechCrunch.

“Giving customers what they want is a sound business strategy. In the last few years in the IT world, the legacy companies that have tried to hang on to the old methods have not been able to do well,” he said.

It's also clear that we're moving into a multi-cloud world where eliminating friction around moving data is more important than ever, says Jake Graham, CEO and co-founder at Bobsled, a startup that helps customers move data between clouds. His character puts him at the forefront of this issue.

“In the real cloud world, the three major cloud vendors are really fighting to build what feels like walled gardens, and as long as you build on them, everything's great. But getting past them is really challenging,” Graham said. “They're starting to get significant pushback from their enterprise customers. , they're saying there's no world where the global enterprise doesn't use multiple platforms.” Charging these fees creates a significant barrier to moving data, making it difficult to share with customers and even across departments within the same company, he said.

Rudina Ceseri, founder and managing partner of Glasswing Ventures, said the change was partly due to regulatory pressure, but not the only reason. “At a high level, this emergence of control is a very simple explanation for a sudden change in behavior,” she said. “However, I think it's also worth pointing out the optics of preempting such a language switch and how Google used it as a marketing tool against Azure. If these companies see a drop in egress fees as an inevitability, Google certainly has a first-mover advantage in painting the cloud as a 'less restrictive' one and attracting early-stage customers,” she said.

“Metaphorically, the market dynamic is moving away from the stick and back towards the carrot. Cloud customers looking to switch providers will be retained by innovative and accessible features, now phasing out the penalty of egress fees,” Ceceri said.

David Linthicum, a longtime cloud consultant, said that while these recent announcements are a fun PR move, he cautions people to carefully review their bills because egress fees aren't the only problem. “It's a nice surprise, but it's not necessarily consequential. Customers need to consider the costs holistically,” Linthicum told TechCrunch. “In other words, what are we paying for the services we're leveraging? Networking that comes with what people call junk fees from cloud vendors. What are we paying for fees, egress fees, other hidden fees?”

But this may not affect startups as much as large enterprise customers. “The cloud ecosystem has more moving parts than necessary, such as services for scaling and security, and the largest companies have built hard infrastructure to rest on,” Ceceri said. “However, the experience for startups will definitely improve as providers must now shift towards innovative features and better customer satisfaction to gain long-term loyalty.”

Graham's primary business is to help move data, with these fees affecting his entire business model. He says the recent changes are a small but important step, but he also sees a future where egress fees and what are not will be difficult to determine, leading to the eventual demise of the fee.

As migration takes a lot of time. It's not a clean break like “I was on AWS and now I'm GCP”. This is a lengthy process where the data sources to be communicated reside in both clouds for a period of time. At the same time, he said, the original cloud vendor is working hard to convert and return customers, and it's an impossible balancing act for these companies.

“You're going to have this battle between a team that's all about winning the customer back, making the customer happy, and another group that's like, wait a minute, we've already lost this customer. We have to charge them everything. Why are we giving them favorable treatment? “

As data becomes more valuable in the age of AI, moving data and putting it to work is becoming increasingly important for everyone. Cloud vendors would be better off getting ahead of this trend instead of throwing up roadblocks to make moving data more difficult. Perhaps this is just the beginning of something much bigger.

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