Market forces cloud computing providers to relax data export fees

Last few monthsThe three biggest cloud vendors, Amazon, Microsoft, and Google, have all relaxed their export fees. It's a way to keep existing customers, but it's a bit crude and doesn't exactly increase customer favor.

With the reality of a multi-cloud world, a stricter monitoring environment, and consumer backlash, among a host of other factors, these companies are starting to realize the error of their ways and are relaxing these fees, as much as there is a lot of caveat emptor and some friction involved. For example, there are limits on the kinds of data you can move, and for each kind of data, you need to contact your provider to request it before you can take your own data out of the cloud. But it's a start.

John Dinsdale, matte analyst and managing director of Arms Management at Synergy Research, a company that tracks the cloud infrastructure market, said the change in mindset is really a recognition of the changing dynamics of the marketplace." I think it's a natural progression of the market," Dinsdale told TechCrunch: "As competition really heats up, cloud providers are being criticized for being overly protective, and that's not good for them.

"Giving customers what they want is the right business strategy. In the IT world over the past few years, traditional companies that have tried to stick to the old ways of doing things have not done well," he said.

It's clear that we're entering a multi-cloud world where removing the friction of data movement is more important than ever, says Jake Graham, chief executive officer and co-founder of Bobsled, a startup that helps customers move data between clouds. His role puts him at the forefront of this issue.

"In the original cloud world, all three major cloud vendors were competing to try to build gardens that felt like walls, and everything was fine as long as you built on top of them. But it was really challenging to leapfrog over them," Graham says." They're starting to get a lot of pushback from corporate customers, who say it's impossible for global businesses not to use multiple platforms. Charging these fees, he says, creates a huge barrier to data mobility, making it difficult to share data with customers or even between departments within the same company.

Rudina Seseri, founder of Glasswing Ventures and a Goon Carburetor, said the change was "partly due to Goon pressure, but that's not the only reason." She said, "At a high level, the presence of Koon is a very simple explanation for the sudden change in behavior." But I think it's also worth pointing out the optics of pre-empting this language shift, and how Google is using it as a marketing tool against Azure. If these companies see the demise of exit fees as inevitable, then Google has a head start in portraying itself as the 'less restrictive' cloud to attract early customers," she said.

The market dynamics are shifting from sticks to carrots," Seseri said, "and since the export fee penalties are being phased out, cloud customers who want to switch providers need to validate them by innovating and validating easy-to-use features.

David Linthicum, a long-time cloud computing consultant, said that while the recently announced measures were a pleasant PR move, he cautioned people to look closely at their bills as export fees were not the only issue." It's a nice surprise, but it doesn't necessarily make a difference. Customers have to look at costs in their entirety," Linthicum told TechCrunch. "In other words, how much are we paying for the services we utilize? How much are we paying for network fees, export fees, and all the other hidden costs?

But this may not affect startups as much as large enterprise customers." Seseri said, "In the cloud ecosystem, there are more moving parts than just storage, such as services needed for scaling and security, and the largest companies have built up tight infrastructures that can be cumbersome to dismantle." However, startups will certainly improve as providers must now further enhance innovative features and improve customer satisfaction to earn long-term loyalty."

Graham, whose main business is helping to move data, sees his entire business model affected by these fees. He says the recent changes are a small but important step, but he also sees a future where it will become increasingly difficult to determine what is and isn't an export fee, which could lead to the eventual demise of these fees.

This is because migration takes a long time. It's not like "I used to use AWS, now I'm using GCP". It's a long process over several years, and the data sources that need to communicate will be in both clouds for some time. Meanwhile, he says the original cloud providers are trying to get customers to change their minds and come back, an impossible balancing act for these companies.

You've got this argument where one team is trying to win the customer, trying to make the customer happy, and the other team is saying, "Wait a minute, we've already lost the customer," he said. We should charge them for everything. Why should we give them preferential treatment?

As data becomes more valuable in the age of artificial intelligence, the ability to move it and put it to work is becoming more and more important for everyone. Cloud vendors would do well to get in front of this trend, rather than putting up roadblocks that make it harder to move data. Perhaps this is just the beginning of something bigger.