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Why are Cloud Egress Fees Really a Thing?
A Google Cloud policy for the UK and EU challenges a fundamental assumption of the cloud industry, aiming to
reduce vendor lock-in.
Key Highlights:
- Google Cloud has introduced a new, no-cost service for data transfers between its platform and other cloud providers for customers in the UK and EU.
- The offering is a direct response to the EU Data Act, which seeks to improve cloud interoperability and data mobility.
- This move addresses the significant commercial barrier of data egress fees, which has long inhibited true multi-cloud adoption.
- While the new service applies only to "in-parallel" multicloud workloads, it could force a reevaluation of data transfer economics across the industry.
- The announcement builds on Google Cloud's previous initiatives to remove switching fees, signaling a consistent strategy of leveraging openness as a competitive differentiator.
The News
Google Cloud has launched a new service called Data Transfer Essentials for its customers in the European Union and the United Kingdom. This service is designed to eliminate the cost of data egress when transferring data from Google Cloud to another provider for the purpose of "in-parallel" workload processing. The initiative directly responds to the principles of cloud interoperability and choice as outlined in the EU Data Act. Find out more by clicking here to read the announcement blog.
Analyst Take
The European Union (EU) has put Google under intense scrutiny for years, primarily over concerns that the company is abusing its dominant market position. Regulators have issued significant fines for what they consider anti-competitive practices. The EU fined Google a total of €8.25 billion from 2017 to 2019 for three separate antitrust violations. The fines included penalties for favoring its own shopping service, for anti-competitive behavior related to its Android mobile operating system, and for abusive practices in online advertising. Most recently, the EU has focused on Google's ad technology business, issuing a €2.95 billion fine and ordering the company to end its "self-preferencing" practices in that sector.
Against this fine-laden backdrop, Google is launching a new free-of-charge data egress service, which is no coincidence.
The cloud industry has long been built on a business model where data is free to enter, but expensive to exit. Data egress fees, or the cost of moving data out of a cloud provider's network, have been a quiet yet effective form of vendor lock-in. For years, these costs have created a significant commercial and technical barrier for organizations considering a multi-cloud strategy, as the prospect of paying substantial fees to move data between providers makes such a strategy economically prohibitive. My analysis of this move from Google Cloud is that it is a direct challenge to this entrenched business practice, particularly in a market that is increasingly shaped by regulatory pressure and customer demands for flexibility.
From my perspective, this announcement is a very clever chess move. While on the surface it appears to be a generous customer-centric policy, it is in fact a strategic play to gain a competitive advantage in a region that is a hotbed of regulatory activity. The EU Data Act, which becomes applicable in September 2025, mandates that cloud providers take measures to remove obstacles to switching, and while it permits them to pass on "cost-based" fees, Google Cloud is going a step further by making it a no-cost affair for qualifying traffic. This proactive approach could position Google Cloud as a market leader in a new era of cloud interoperability, putting pressure on its competitors, specifically AWS and Microsoft Azure, to respond in kind.
This announcement is a subtle but potent shift. It's not about a customer leaving Google Cloud, but rather about a customer using Google Cloud alongside another provider without penalty. This is a subtle but important distinction. The core of the cloud business model has been built around the concept of a single provider acting as the gravitational center for a customer's data, with egress fees acting as the physical laws that make escape difficult. By waiving these fees for parallel workloads, Google Cloud is effectively re-writing the laws of physics for a specific, and increasingly important, part of the market. This is particularly relevant for modern architectures where data must flow seamlessly between different environments for things like analytics, machine learning, and disaster recovery.
This move feels like a calculated bet that the long-term benefits of attracting new multi-cloud customers will outweigh the short-term revenue loss from these specific egress fees. It could also have the effect of accelerating the adoption of Google Cloud for new workloads that might have otherwise been kept on-premises or in a single cloud due to the fear of lock-in. While there will be some who argue this is a temporary measure, the trend is clear. Regulators in the UK and EU are laser-focused on this issue, and it's only a matter of time before these kinds of costs become a thing of the past. Google Cloud is simply getting ahead of the inevitable.
What was Announced
The new service, Data Transfer Essentials, is designed to enable no-cost data transfer for specific "in-parallel" multicloud workloads. This means that if an organization is running a distributed application with components on both Google Cloud and another cloud provider, the traffic moving between these environments for the purpose of that single workload will not be charged egress fees by Google Cloud. To be clear, this is not a blanket waiver of all egress costs. Standard data transfers, such as moving an entire data set to another cloud for a full migration, will still be subject to existing Network Service Tier rates. The qualifying traffic is designed to be metered separately and will appear on the customer's bill at a zero charge. The service is architected to allow organizations to use the best-of-breed solutions from various providers without having to factor in punitive data transfer costs. Google Cloud has published a configuration guide to help customers identify and specify their eligible traffic. This functionality is being launched in response to the core principles of the EU Data Act and aims to deliver greater digital operational resilience and flexibility for European customers.
Oracle Cloud Infrastructure - Changing The Game For Egress And Ingress
As the hyperscalers look to respond to the market dynamics around a hybrid multi-cloud reality, Oracle Cloud Infrastructure's (OCI) offers a unique approach, with its Oracle Dedicated Region Cloud@Customer and its strategy of offering its database services within other clouds, is dramatically reshaping the landscape of data sovereignty and transfer. It provides a level of control and isolation that directly addresses the strict data residency and access requirements of governments and regulated industries.
By allowing customers to operate a full OCI region within their own data centers, it minimizes data ingress/egress and gives them physical and administrative control. This forces hyperscalers like AWS, Azure, and Google Cloud to respond with their own sovereign cloud offerings. They have introduced services like AWS Digital Sovereignty, Microsoft Cloud for Sovereignty, and Google Cloud's Sovereign Clouds, which include features like local data centers, restricted operational access, and customer-managed encryption keys, to compete for these high-value, highly regulated workloads. This shift is turning data sovereignty from a compliance burden into a competitive differentiator in the cloud market. As jeetu Patel, SVP of Product for Cisco, recently said, “Data is your moat” and how that data is moved in a multi-cloud world is becoming critical for many clients, and this announcement speaks volumes about this dynamic
Looking Ahead
I am observing a market in flux. For years, the major cloud providers have enjoyed a comfortable position where they could impose a "tax" on data movement. This tax, in the form of egress fees, has been a significant barrier to both switching providers and adopting a truly multi-cloud strategy. Google Cloud’s announcement is not just a tactical pricing change; it is a strategic repositioning. It is a direct acknowledgment that the old model is no longer sustainable, particularly with the advent of regulations like the EU Data Act. Google is also getting ahead of regulatory scrutiny. For me this is a ‘fine avoidance’ play rather than a competitive or revenue-focused play
My perspective is that this is the first shot in a new war for cloud supremacy, one that will be fought on the battleground of openness and interoperability. The key trend I'm going to be looking out for is how AWS and Microsoft Azure respond. Will they follow suit and offer similar no-cost options, or will they hold the line and risk being seen as anti-competitive? I believe that the pressure from regulators and from customers will be too great to ignore.
When you look at this announcement, it is a significant win for customers, particularly those in data-intensive industries like finance and media who are building complex, distributed architectures. This move will make it easier for them to pursue a strategy of using the best cloud for each specific workload, rather than being locked into a single provider because of the cost of moving data. Going forward, I am going to be closely monitoring how the company performs on customer adoption of this new service and whether the no-cost egress for multicloud use cases translates into a meaningful increase in new business. I will be tracking whether Google Cloud's bold move forces a wider industry shift towards more open and portable cloud services. It is a new game, and the rules are changing.
Ron Westfall | Analyst In Residence
Ron Westfall is a prominent analyst figure in technology and business transformation. Recognized as a Top 20 Analyst by AR Insights and a Tech Target contributor, his insights are featured in major media such as CNBC, Schwab Network, and NMG Media.
His expertise covers transformative fields such as Hybrid Cloud, AI Networking, Security Infrastructure, Edge Cloud Computing, Wireline/Wireless Connectivity, and 5G-IoT. Ron bridges the gap between C-suite strategic goals and the practical needs of end users and partners, driving technology ROI for leading organizations.
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Steven Dickens | CEO HyperFRAME Research
Regarded as a luminary at the intersection of technology and business transformation, Steven Dickens is the CEO and Principal Analyst at HyperFRAME Research.
Ranked consistently among the Top 10 Analysts by AR Insights and a contributor to Forbes, Steven's expert perspectives are sought after by tier one media outlets such as The Wall Street Journal and CNBC, and he is a regular on TV networks including the Schwab Network and Bloomberg.