Oracle and Cloudflare are attacking Amazon over the notorious fees it charges to get data out of its

Publish date: 2024-08-05
2021-10-05T17:44:50Z

Database giant Oracle and $36 billion web security firm Cloudflare are two very different companies, but they found common ground in recent days when they both took aim at mutual rival Amazon Web Services over what's called the data egress fee — casting a light on what may prove to be a rare competitive weakness for AWS.

Generally speaking, cloud giants like Amazon Web Services, Microsoft Azure, and Google Cloud don't charge customers anything to move data onto their respective platforms. Getting that data off their platforms, however, invokes the data egress fee. And those fees can add up: Companies like Apple have paid $50 million in egress fees to AWS in a single year, reports The Information.

Insider

Experts suggest that Oracle and Cloudflare have hit on a frustration felt by many cloud customers: The disconnect between paying nothing to upload data to cloud platforms, combined with the shock of seeing how much it costs to get it back out, can feel like "they twist the knife and they rub salt," said Gartner research vice president Adam Ronthal. 

So by bringing the matter of data egress to the fore this week, those two firms may have established the notorious fees as the next big battleground in the cloud wars.

First, Cloudflare launched a competing product to Amazon's flagship S3 storage service that has "all the compatibility of S3," but "removes the one thing that is the most annoying about S3, which is the egregious egress cost," CEO Matthew Prince told Insider last week. He said Cloudflare's ambition is to be "the fourth major cloud platform," with eliminating egress fees key to its strategy.

Then, Oracle CMO Ariel Kelman, himself a former AWS executive, separately said in an interview with The Information that Amazon's cloud pricing is "hostile" because of its egress fees. He said Oracle stopped pushing customers for long-term cloud contracts, and already charges significantly lower egress fees than AWS. Oracle lags far behind AWS in the cloud market but has ambitions of presenting a more direct threat against it.

While all three major cloud providers are known to charge data egress fees, Oracle and Cloudflare independently singled out AWS for their criticism, charging that Amazon's status as the dominant cloud on the market means that data egress costs amount to an unfair way to trap customers within its ecosystem.

Avi Shillo, the cofounder and CEO of Statehub, a startup that creates copies of data to make it easier for companies to move it, told Insider that the dynamic gives the cloud providers — and especially AWS — too much power in the market.

"You're just stuck. It's going to take you too long of a time to move all your data, and it's going to be too expensive to do so," he said. "So from experience, the cloud vendors know that when the customers become so heavy, they're becoming unmovable."

Responding to Cloudflare's product launch, an AWS spokesperson said: "We agree that Amazon S3 has been a game changer for developers. With the deepest feature set and industry-leading scalability, data availability, security, and performance, customers are storing well over 100 trillion objects there today. While we can't comment on a product that has been announced but not released, we welcome competition generally across our businesses because we believe it is healthy and helps grow markets."

'Death by a thousand cuts'

Amazon's egress fees have caught criticism over the years for the complexity involved in calculating them.

While Microsoft and Google list their egress fee schedules on their websites in straightforward terms, industry experts like The Duckbill Group's Corey Quinn have gone to great lengths to break down all the many factors that can go into Amazon's final data egress cost.

Egress fees are typically priced in the pennies per gigabyte, and Ronthal told Insider that most customers can expect to pay between $20 to $50 per terabyte of data they move, depending on their provider and the type of data. For most customers, it's more of an annoyance than a serious concern.

"It leaves you with a bad taste," he said, "but it's probably not going to kill your financials."

At the same time, it would be a bad idea for even smaller companies to ignore data egress costs entirely, he said. Beyond just moving data off of the cloud, some providers charge a data egress fee when moving between geographic regions of the same platform, or when a customer makes a backup of data stored in the cloud.

"You do have the potential here to have it kill you with a death by a thousand cuts if you don't pay attention to data movement between clouds," he said. 

That's a big reason why moving from cloud to cloud becomes tricky for many customers. Data egress fees are "the big headline item" when customers talk about managing their cloud environments, 451 Research analyst Melanie Posey told Insider, "because if you move all your data to the cloud, you can't do anything with your applications without your data." 

The scrutiny is an opportunity for Amazon competitors

Competitors large and small have already used the frustration over egress fees to take a competitive stand against AWS. 

"From customer after customer, after customer, we've heard, first of all, 'Thank you for talking about it,'" Prince, Cloudflare's CEO, told Insider recently. "And we've seen a number of people switch from AWS to Google or Microsoft or [Alibaba] or Tencent, that have been willing to actually cut the cost of egress."

Oracle, for its part, has been promoting what it says are its own significantly lower egress fees, and starting in 2019, eliminated data transfer fees between its cloud platform and Microsoft Azure.

Even smaller cloud providers like Wasabi, which competes with Amazon's S3, cut egress fees altogether to stand out from the cloud behemoth: "We have one line item on our bill, and that's the amount of storage you use," CEO David Friend previously told Insider. "And people love that about Wasabi."

For customers who are already on board with AWS, Microsoft, or Google, however, there's currently not much they can do about the cost of data egress, other than getting really disciplined about managing it. Even the largest cloud customers have only very limited power to negotiate those fees, the experts suggest.

As 451 Research analyst Posey put it, "If you don't like it, don't go to the cloud."

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