Explained: Why is Google Cloud eliminating data transfer fees

Last week, Google announced in a blog post that it is waiving data transfer fees for businesses and customers looking to migrate their data away from Google Cloud to other cloud providers or on-premise solutions. Google said that this decision is to accommodate evolving customer requirements and a step against ‘restrictive and unfair licensing practices’.

“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,” said Amit Zavery, head of platform, Google Cloud.

Taking a dig at rivals like Microsoft and AWS, Google said that they levy heavy cost in cases customers decide to use competitors’ cloud infrastructure, thus limiting interoperability. Quoting a June 2023 study by non-profit trade association CISPE, Google’s blog said that such restrictions impose a 300% cost increase to customers.

To be sure, this data migration expense comes under the larger umbrella of data egress fees. Also called bandwidth or data transfer fees, it is the cost levied by cloud providers for moving data from the cloud storage where it is uploaded to another provider/on-premise. This fee is in addition to the fees organisation pay for cloud storage and computation. A 2021 study by IDC showed that egress fees may be up to 6% of the total cloud storage costs.

Google’s decision to eliminate data transfer costs comes on the back of a probe announced by the UK’s Competition and Markets Authority (CMA). In October 2023, the UK Office of Communications’ (Ofcom’s) reported that certain features of the cloud market, dominated by AWS and Azure (driving 70-80% of the business) could be stifling competition. One of these features was the heavy egress fees levied by cloud providers. Taking cognisance, CMA appointed an inquiry group to carry out the investigation, with a deadline for the agency’s final decision of April 4, 2025.

Earlier in June last year, Google complained to the US Federal Trade Commission against Microsoft’s alleged anti–competitive practices, accusing the tech giant of locking customers in its cloud services. Google said that Microsoft uses restrictive software licensing terms which makes customers tap onto other providers like itself. Google had raised similar objections against Microsoft with the European regulators, as reported by The Register. 

In 2022, Microsoft and AWS combined accounted for 62% of the cloud market share, as per an IDC report. Apart from these players, Google Cloud, Alibaba Group, and IBM are leading cloud providers of the world.