Inside Google’s strategic move to eliminate customer cloud data transfer fees

Google’s move to eliminate data transfer fees for customers changing cloud providers is in response to anti-trust investigations underway in the UK and the European Union (EU), analysts say.

“The elimination of these fees by Google appears to be a strategic move to alleviate concerns raised by regulators who are investigating public cloud service providers for anti-trust behavior, particularly in the UK and Europe, and to make it easier for clients to migrate away from Google Cloud services,” Steven Dickens, vice president of hybrid cloud practice at The Futurum Group, said.

Google early on Friday dropped a blog post announcing that the company would let its enterprise customers, effective immediately, who wish to stop using Google Cloud and migrate their data to another cloud provider and/or on premises, take advantage of free network data transfer to migrate their data out of Google Cloud.

“This applies to all customers globally,” Amit Zavery, vice president of head of platforms at Google Cloud, in the post.

Zavery’s blog post, too, alludes to the anti-trust investigations underway in the EU and a separate one in the UK.

“Certain legacy providers leverage their on-premises software monopolies to create cloud monopolies, using restrictive licensing practices that lock in customers and warp competition,” the vice president wrote.

Around July last year, UK communications regulator Ofcom, after the publication of an interim report, referred the cloud infrastructure market for investigation around anti-competitive practices in cloud computing to the Competition and Markets Authority (CMA).

The interim report said that existing cloud customers in the UK are paying more than they should be for their cloud infrastructure or having to settle for low-quality services and that the regulator had heard concerns from some customers about their inability to switch or use multiple providers.

That development came three months after Ofcom raised “significant concerns” about AWS and Microsoft, alleging that they were harming competition in cloud infrastructure services and abusing their market positions with practices that make interoperability difficult.

In October, the CMA launched an antitrust probe into Microsoft and Amazon’s cloud services. In November, Google Cloud too had shared a letter with the CMA blaming Microsoft for anti-competitive practices around cloud offerings, followed by a letter from AWS in December, who also blamed Microsoft.

The EU, too, in December notified that its anti-trust investigations into public cloud service providers was still underway.

Further, around June last year, Google had lodged a complaint with the US Federal Trade Commission alleging that Microsoft was trapping enterprises customers in its cloud.

“Google’s move to waive off egress fees when moving data out is firmly a hedge against pending regulatory oversight and to garner goodwill, particularly with EU regulators.  In this context, any revenue impact will be a lot smaller than any potential downstream fines,” Dickens said.

Dickens’ theory is also supported by the timing of the announcement, which is within 24 hours of the EU Data Act coming into force, Hyoun Park, chief analyst at Amalgam Insights, said.

This Act, according to the Union, is expected to improve access to data.

“The timing is too perfect. This Act defines a variety of requirements for European Union-based cloud providers and allows these providers a window of 20 months to comply. Google has chosen to be compliant with the data egress aspects of this act on day one, and to advertise this on the global basis,” Park explained, adding that he expects AWS and Microsoft to follow suit soon.

On the other hand, analysts also say that Google’s move to waive of egress charges should bode well for enterprise customers.

“There’s been a huge customer backlash across all cloud computing companies on account of the egregiously priced egress fees. It’s gotten to the point that customers don’t want to move to a new provider because of the fees,” Maribel Lopez of Lopez Research, said, adding that she saw these fees as a mechanism for locking in enterprises.

Further, Futurum Group’s Dickens believes that the fees waiver aligns the broader industry’s move towards reducing or eliminating data egress fees, as seen with the formation of the Bandwidth Alliance in 2018, which includes several major cloud providers committed to reducing these costs. 

Although, the idea of the egress fee waiver sounds welcoming, a deeper look into the frequently asked questions (FAQs) section of the announcement may make some enterprises see red.

Firstly, any enterprise that wants to avail the data transfer fees waiver has to end its relationship with Google Cloud and all of its services.

Secondly, the waiver will be applicable as long as any enterprise customer is moving all its data out of Google Cloud “within 60 days of eligibility approval” and terminating its contract.

Moreover, there is a need for an application to be submitted for a case-by-case review of the Google Cloud team in order to process the fees waiver. The steps can be found here.

“The Google Cloud Support team will review the request and notify you of when you may initiate the migration of all your workloads and data from Google Cloud to another cloud service provider or an on-premises data center for free in anticipation of terminating your Google Cloud agreement,” the company wrote in a post.

The FAQs also mention that only data stored as part of these service — BigQuery, Cloud Bigtable, Cloud SQL, Cloud Storage, Datastore, Filestore, Spanner, and Persistent Disk — are eligible for free transfer.