You know it's bad if a European Commission representative is calling something a rip-off.
And that's just what happened at, “The EU Data Act, an enabler for multicloud acceleration in Europe”, a Cloudflare-Scaleway joint conference on cloud adoption in Europe, held last June in Brussels.
What were they referring to?
The stupidly high egress (aka lock-in) fees that many cloud providers charge to move your data away from them to a different cloud provider. Often this is in the six-figure range, making it so cost-prohibitive that companies simply can't afford to leave. This underpins a sentiment I heard from a startup founder, who once said “divorcing a cloud provider is harder than divorcing a spouse.”
At this hybrid event, speakers Pierre Chastanet, Head of Unit for Cloud and Software (DG CNECT, European Commission), Scaleway CEO Yann Lechelle, and Cloudflare's Senior Manager for Public Policy Petra Arts debated the merits of the European Data Act, and if Europe is pushing hard enough to address the consequences of the massive egress fees in cloud that we're seeing today.
Egress fees – a threat to Europe's future
Matthew Prince, CEO of Cloudflare, laid the problem out succinctly: “You should be free to make decisions on how, where, and when you can move your data. In reality however, companies face fees that lock you in to one vendor.”
The consequence of high egress fees is that it makes it difficult for organisations to move data away from the cloud provider they initially started out with. But as time goes on, organisations grow, their needs can change, and very possibly, their existing cloud provider may not be best suited to their current needs.
This has a major impact on digitisation. While European enterprises are 42% digitised, using cloud services, which is considered not a bad rate, the European Commission found that of those 42%, the majority make use of only basic digital tools – email, file storage, etc. There are very few that make use of advanced digital tools, such as AI, machine learning, computer vision, big data, etc.
EC representative Chastanet shared that the goal is to reach 75% advanced cloud-based digital services by 2030. But there's a major obstacle – cloud egress fees. Enterprises are stuck with a cloud provider that doesn't meet their needs, they will find it infinitely more difficult to implement these advanced digital tools, which are necessary to develop high added-value products, those considered to be the future backbone of Europe's economy.
In short – ensuring the free flow of data is the prerequisite for productivity, competitiveness, and innovation.
Eggs in one basket
A key downside to being locked into a contract with one and only one cloud provider, is that it elevates your exposure to risk. The European Commission invites companies to evaluate risk when it comes to data storage, and act accordingly. In other words – don't put all of your eggs in one basket.
In recent years we've seen the widespread effects of major cloud service provider outages. When major content delivery platforms like Fastly or Akamai go down, they take all of the websites that use their services along with them. And while they're usually promptly dealt with, consumers are still left with a few hours of outages – which is no good for business, and even worse for critical infrastructure.
The lesson we should all be gleaning here is that we are only as cyber-secure as the platforms we host on. If we lose access to one of them, we need to have alternatives in place.
Risk is also more far-reaching than simply a short-term internet outage. What if, say, the transatlantic internet cord was severed? Scaleway’s Lechelle pointed out that we've already seen an increase in risk in recent years, driving the importance of establishing European data sovereignty:
“In the end, it comes down to risk management, where each of us play a role in deciding how society is resilient to external risks. We've had a number of events recently with Trump, promoting America first, as America is facing their own challenges, also competing with China. We've had Covid, which has spurred a sudden need for technology. We've had the war in Ukraine, that challenges the very notion of Europe, and creates the premises of what we call “splinternet”, which is the contrary of what we want to see – in order to keep the market providing solutions to take society forward.”
As a result, he emphasizes the need to take responsible decisions regarding the internet from the standpoint of European citizens and businesses. That includes making full use of multicloud, buying services from European providers, and hosting on European soil.
Too little, but not too late
It's not all bad. Enterprises and politicians are waking up to the threat of not having European data sovereignty, and are starting to take action.
The Bandwidth Alliance, founded in 2019, is made up of cloud service providers who are pushing back against extreme data transfer costs – looking to eliminate egress fees or dramatically reduce them.
The European Commission has proposed the European Data Act, which addresses the topic of the free flow of non-personal data. Among other things, it will limit unreasonable “switching costs”, and also ensure data service provider interoperability, to further ease the process of switching cloud providers.
While these are good and welcome steps, some believe that we're not pushing enough.
Lechelle believes that there should be a mandated “two-cloud minimum”, to ensure competitiveness and increase security resilience, similarly as was mandated by the Chip Act.
“I see a myth and a lie – that one provider should provide everything. That is a danger, because there is no other industry where this is the case. In the Chips Act, one objective is that everyone depending on chips uses two chip providers. If we talk about multicloud, we should be talking about a two-cloud minimum.”
The reality that we're living in currently is that, in the cloud industry, a free, fair and open market does not yet exist; egress fees are just one of the many factors that have killed it. And without healthy competition, we lose the impetus for companies to innovate, create new features, or offer a better quality of services. This is something that we all should be concerned about.