Microsoft Azure removes exit fee as EU regulations kick in

Microsoft has announced that Azure customers can now transfer their data to other cloud providers or on-premises data centers via the internet free of charge, following similar moves by Amazon and Google.

“We support customer choice, including the choice to migrate your data away from Azure,” Microsoft said in a blog post.   

The announcement comes close on the heels of a couple of regulatory updates. In January, the EU announced the enforcement of its Data Act, aimed at facilitating access to industrial data and providing legal clarity on data usage. The act is set to enable customers to switch between different cloud providers more seamlessly, with an eventual provision for such transitions to be free of charge.

In October last year, the UK’s Competition and Markets Authority announced the initiation of a market investigation into the supply of public cloud infrastructure services within the country.

In March this year, Amazon Web Services (AWS) announced the elimination of data transfer fees for enterprise customers migrating to alternative cloud providers, following a similar policy introduced by Google in January.

Compliance over costs

Analysts point out that the latest move is prompted by the need to comply with regulations. In its blog post, Microsoft said that “the exemption on data transfer out to the internet fees also aligns with the European Data Act and is accessible to all Azure customers globally and from any Azure region.”

“In this scenario, we’re facing more of a stick situation,” said Sanchit Vir Gogia, chief analyst and CEO at Greyhound Research. “It’s an anticipation move, which I think is justifiable. You can’t expect self-regulation at all times. Vendors will naturally try to monetize every possible avenue, which is fair from their standpoint.”

While this move might reduce costs in select scenarios, this wouldn’t prompt customers to exit Azure or any other cloud service overnight. But there are some scenarios where it could make a difference.

“There won’t be a direct impact on operational costs,” Gogia said. “The status quo remains. The idea of exiting a cloud service like Azure is more notional than real. However, an interesting scenario would be when an application in one cloud service needs to communicate with data in another. This inter-cloud communication, especially in cases like a data lake, where significant data migration is required, is where the real costs come in.”

Exiting a cloud service entirely is a rare and complex process, according to Gogia. It involves years of transitioning, during which a company must negotiate, benchmark, deploy applications, and data, and then build a technical team to stabilize the new environment.

“So, realistically, full migrations are uncommon,” Gogia added. “The cost of migration might decrease, but that’s only relevant in rare cases where a total exit from a cloud service is necessary.”

Appeal to EU customers

Although there may not be a mass exodus of customers from any cloud service, removing these fees may allow Microsoft and others to increase their competitive edge and address some critical business concerns regarding cloud costs.

This change will likely accelerate cloud adoption and promote a more flexible and open cloud ecosystem, pointed out Thomas George, president of Cybermedia Group and CMR. It may also benefit businesses with high data transfer needs, enabling them to leverage cloud resources more freely without worrying about escalating costs.

“By stopping egress fees, Microsoft strategically positions Azure to align with European data laws, particularly those concerning data sovereignty and privacy,” George said. “This move could enhance Azure’s appeal to European businesses that are increasingly concerned about compliance with regulations such as GDPR.”