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Cloudflare slams AWS egress fees to convince web giant to join its discount data club

Lower your prices and play nicer, CDN goliath suggests

Updated Cloudflare on Friday accused competitor Amazon Web Services of massive markups and hindering customer data portability, even as it invited the cloud services giant to join its discount data initiative known as the Bandwidth Alliance.

"AWS’s bandwidth pricing is bonkers," said CEO Matthew Prince, via Twitter. "And they stand alone in the industry not discounting when their customers send traffic to peered networks."

Prince and Nitin Rao, SVP of global infrastructure at Cloudflare, elaborated on that claim in a blog post that argues AWS is charging customers orders of magnitude more than its costs and makes a mockery of its parent company's mission statement that Amazon strives "to offer our customers the lowest possible prices…"

In particular, Prince and Rao take issue with cloud giant's egress data transfer, or bandwidth, pricing – what it charges to send data to external networks.

"During the last ten years, industry wholesale transit prices have fallen an average of 23 per cent annually," explain Prince and Rao. "Compounded over that time, wholesale bandwidth is 93 per cent less expensive than 10 years ago. However, AWS’s egress fees over that same period have fallen by only 25 per cent."

They further note that since 2018, the egress fees AWS charges in North America and Europe have remained unchanged while wholesale prices in those markets have gone down by more than half.

AWS is able to charge excessive rates, they suggest, because customers pay for delivered data volume while AWS pays for bandwidth based on the capacity of its pipes. This difference – charging customers using a "stocks" model while incurring costs under a "flow" model – leaves lots of room for AWS to profit based on effective utilization of its resources.

The pair made various estimates for AWS's data transfer profit margin, using the AWS Simple Monthly Calculator – ironically named, they contend, in reference to AWS's famously difficult-to-understand pricing scheme. They project, for example, that AWS charges customers in the US, Canada, and Europe 80 times more than its operational cost.

What's more, they argue, the effective markup is likely to be higher still because when AWS exchanges data with a network like Cloudflare using a direct, settlement-free peered connection though a private network interface, incremental costs are negligible. And there are also rebates that Amazon collects from colocation providers who charge cross connection fees to customers to consider.

Welcome to the Hotel California

Only AWS, however, is in a position to provide data on its actual costs but the company has not done so – most businesses keep such details to themselves.

Prince and Rao also suggest there's an anti-competitive aspect of AWS's decision to charge a premium for data leaving its ecosystem (egress) but not for data entering its ecosystem (ingress).

They liken this to "Hotel California pricing," a reference to a line from The Eagle's 1976 song of the same name that describes a place where you can never leave. The implication is this pricing model deters companies dependent on AWS from choosing to move their data and business elsewhere, even though Google and Microsoft also charge for data egress.

"The only rationale we can reasonably come up with for AWS’s egress pricing: locking customers into their cloud, and making it prohibitively expensive to get customer data back out," they said. "So much for being customer-first."

Some AWS users have come to this conclusion too.

However, the pricing for data egress from Google Cloud Platform (~$0.11) and Microsoft Azure (~$0.0875 per GB) for 10 TB doesn't appear to be vastly different from AWS (~$0.09 per GB), at least on paper.

What makes Cloudflare single out AWS is that Microsoft Azure and Google Cloud, while neither participate in the Bandwidth Alliance, "will substantially discount egress charges for their mutual Cloudflare customers."

In short, Cloudflare is sticking it to AWS in the hope the cloud service giant will play ball and play nice.

The Bandwidth Alliance, Cloudflare said in a separate post, can save customers between 7.5 per cent and 27 per cent on egress data transfer charges. Presently the group consists of: Alibaba, Automattic, Backblaze, Cherry Servers, Dataspace, DNS Networks, DreamHost, HEFICED, Kingsoft Cloud, Liquid Web, Scaleway, Tencent, Vapor, Vultr, Wasabi, and Zenlayer.

The Register asked Amazon for a response. The web titan expressed its intention to so do though its reply did not arrive by our deadline. We will update this story once we hear back.

If we had to guess, we'd predict that Cloudflare's negotiation via social media won't make AWS abandon its cloud-based printing press for cash. And while the Attorney General of Washington DC recently filed an antitrust lawsuit against Amazon over alleged retail market abuses, its AWS subsidiary remains for the moment unthreatened by regulatory intervention. ®

Full disclosure: The Register is a customer of Cloudflare.

Updated to add

In a statement provided to The Register two days after this story was filed, Amazon pushed back against Cloudflare’s claims.

"Major cloud providers charge similar amounts for transferring data out of their clouds. However, not all clouds are the same," an Amazon spokesperson said.

"It’s important to note that data transfer costs are more than just bandwidth. In addition to bandwidth, our costs reflect the extreme levels of redundancy that our customers get in our data center and broader networks and the value of a purpose-built backbone that reduces latency and improves throughput.

"Our pricing reflects the cost of network investments AWS makes in equipment and network backbone (in addition to bandwidth) to provide a highly available, performant, and redundant network that scales to customer workloads. While delivering unmatched value to customers, we’ve also made eight data transfer out (egress) related price cuts in the last 11 years. And, the majority of our heavy data transfer workload customers use Amazon CloudFront (AWS’s Content Delivery Service) to enjoy even more significant cost savings."

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