Google vows not to charge data transfer fees when cloud customers exit

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Google Cloud CEO Thomas Kurian speaks at the Google Cloud Next event in San Francisco on April 9, 2019.

Michael Short | Bloomberg | Getty Images

Google’s latest effort to win cloud deals over larger rivals Amazon and Microsoft involves making it cheaper for clients to leave.

In a blog post Thursday, Google took aim at cloud competitors that it says use their market power to force customers into “punitive” contract terms. Google gave the example of a company charging five times as much if a client uses a competitor’s cloud and “limiting interoperability of must-have software.” 

“Starting today, Google Cloud customers who wish to stop using Google Cloud and migrate their data to another cloud provider and/or on premises, can take advantage of free network data transfer to migrate their data out of Google Cloud,” Amit Zavery, a Google cloud vice president, wrote in the post. “This applies to all customers globally.” 

While Zavery didn’t name any specific vendors, data transfer fees are a profitable source of revenue for tech companies and can serve to reduce churn because they punish clients for going elsewhere. In 2018, Cloudflare announced the Bandwidth Alliance, a group of companies, including some cloud providers, that reduce or eliminate those data transfer, or egress, fees. Alibaba, Google, Microsoft and Oracle are all members, but Amazon is not.

Google is declaring that all transfer fees should be wiped away and companies should instead win with their technology and service.

“Customers should choose a cloud provider because it makes sense for their business, not because their legacy provider has locked them in with overly restrictive contracting terms or punitive licensing practices,” Zavery wrote.

A spokesperson for Amazon Web Services said in an emailed statement that since 2021, over 90% of customers have been paying nothing to transfer data out of AWS. The company said that in accordance with the European Data Act, which has just gone into effect and imposes data-sharing requirements on cloud providers, AWS will not charge “more than cost” for data transfers.

“Restrictive licensing practices remain a far bigger issue to customers who want the choice of working with their preferred cloud provider,” the spokesperson said.

Microsoft didn’t respond to a request for comment.

Under the leadership of Thomas Kurian, Google’s cloud business turned profitable last year, adding prominent customers and improving efficiency. Kurian’s former employer, Oracle, was notorious in the pre-cloud era for locking customers into its long-standing database software.

In the highly competitive and much more open world of cloud computing, locking in customers has become a more difficult proposition. By making transfer free, Google could be pressuring rivals to follow suit or risk losing out on new business prospects.

Egress costs vary based on several factors, including destination, origin and data volume. For example, before the change, a company planning to depart from Google and move a petabyte of data in the Google Cloud Storage service from the northern Virginia cloud region to a non-Google U.S. data center might have expected to pay around $80,000, based on list prices. Large customers generally receive discounts.

Google’s latest pronouncement follows a pattern, as the company has been more willing of late to criticize rivals on practices it sees as anti-competitive. Last year Google expressed concerns about Microsoft’s cloud practices to officials in the U.S. and the European Union.

“We will continue to be vocal in our efforts to advocate on behalf of our cloud customers — many of whom raise concerns about legacy providers’ licensing restrictions directly with us,” Zavery wrote. “Much more must be done to end the restrictive licensing practices that are the true barrier to customer choice and competition in the cloud market.”

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