Clearing the Clouds in the EU

January 5, 2023

For many companies, computing in the cloud so someone else can worry about all that infrastructure seems like a no-brainer. But there is one big problem. The cloud services market is dominated by just three players: Amazon, Google, and Microsoft. The Next Web argues that “Dependence on Cloud’s ‘Big Three’ Is Hurting EU Startup Growth—It’s Time for a New Approach.” Writer Marris Adikwu informs us tech firms in Europe are suffering losses, cutting payroll, and struggling to attract investors. Several related factors contribute to the problem, like the war in Ukraine, the energy crisis, and rising inflation. However, Adikwu asserts, a lack of cloudy competition also plays a role. Yep, it is time to gear up for more pressure on some high profile tech giants. We are told:

“While founders are reviewing budgets up and down looking to trim as much as possible in order to stay afloat, one major spend has been left largely untouched: cloud services. While the shift to the cloud was intended to reduce computing costs, many companies that have adopted these services are facing a surge in spending. Contract lock-ins and egress fees are making it impossible to leave. In fact, some argue that the cloud could be costing many businesses more than it’s actually saving.”

Yes, one must pay to leave but often not to enter. That can make the contract seem like a great deal at first. But once a cloud service is holding a firm’s data, the company is stuck if it cannot afford the fees to move it out. Held hostage are little items like office software, payroll systems, and customer websites. We learn:

“Currently, AWS charges between $0.08 to $0.12 per GB in egress fees, meanwhile Google Cloud and Microsoft Azure charge $0.08 and $0.05 per GB respectively for inter-continental data transfers from North America to Europe. According to Yann Lechelle, CEO of EU-based cloud provider Scaleway, startups often accept six-figure cloud credits from AWS, GCP, and Azure and take on products and services that they don’t always need, because they seem free.”

EU regulators address the issue in the European Data Act, but that legislation is still under discussion and, some feel, does not go far enough to protect against unfair contractual terms anyway. Adikwu recommends startups protect themselves by carefully considering their needs, spreading services across multiple cloud vendors, seeking out reserved instances and other discounts, and tapping into cost-saving technology. See the write-up for more details on these suggestions.

Cynthia Murrell, January 5, 2023


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