UK Regulator Finds Cloud Egress Fees, Starting at $0.085 per GB, Deter Switching

Moving data out of a cloud provider costs real money. AWS charges $0.09 per gigabyte, Azure $0.087 per gigabyte, and Google Cloud $0.085 per gigabyte for data leaving their networks. For a business holding a petabyte of data—a common scale for cloud infrastructure—that's tens of thousands of dollars in transfer fees before a customer can even migrate to a rival provider. The UK's competition regulator has provisionally found that egress pricing functions as a lock-in mechanism that depresses competition in cloud computing, and regulators in the U.S. and EU have raised similar concerns.

The structure is asymmetrical by design. Data moving into a cloud provider is free, whether flowing from a customer's own data center or from the internet. Data moving out costs money. This creates a gravitational pull: the more information a company stores on a cloud platform, the more expensive it becomes to move anywhere else. The setup discourages customers from adopting multi-cloud strategies or switching when a competitor offers better service or pricing in specific workloads.

How egress fees create switching costs

Egress fees are charges for data transferred out of a cloud provider—to a customer's own servers, to another cloud platform, or to the public internet. All three major hyperscalers employ tiered pricing: the per-gigabyte cost falls as volume increases, but charges never disappear entirely. Azure applies $0.087 per gigabyte for standard internet egress in most regions. AWS bills $0.09 per gigabyte with 100 gigabytes free per month. Google Cloud Standard Tier costs $0.085 per gigabyte after 200 gigabytes of free monthly egress. These pricing tiers mean that a small business transferring data out occasionally pays the highest per-gigabyte rate, while a large enterprise migrating its entire data center can negotiate volume discounts—but still faces a substantial bill.

These per-gigabyte fees compound at scale. A company migrating 100 petabytes faces an $8.7 million egress bill on Azure or a $9 million bill on AWS before it can operate on a rival platform. Migrating 10 petabytes still costs between $870,000 and $900,000. A 50-petabyte migration costs $4.35 million to $4.5 million. These are migration costs only, separate from the expense of setting up infrastructure on a new platform. The asymmetry is intentional: providers want to minimize switching.

The fees also apply within a provider's own ecosystem. Moving data between regions on the same cloud platform costs money; so does pulling data for analysis on a rival's service while keeping infrastructure on the primary cloud. Cross-region transfer on AWS costs $0.02 per gigabyte per region. This makes hybrid and multi-cloud architectures—which companies use to avoid dependency on a single provider—expensive to operate. A business running workloads on both AWS and Azure, or using Google Cloud for specific machine-learning services while maintaining its primary infrastructure on AWS, must pay egress fees every time data moves between environments.

Regulators find lock-in at work

The UK Competition and Markets Authority provisionally found in January 2025, as part of its Cloud Services Investigation, that egress fees depress competition. The CMA found that AWS holds 40 to 50 percent of the UK cloud market and Microsoft Azure holds 30 to 40 percent. In a market with that concentration, the authority determined that "the presence and magnitude of egress fees reduces the ability of, and/or incentives for, customers to switch" to Google Cloud or other rivals. The CMA's provisional findings noted that both Amazon and Microsoft have "significant unilateral market power" in Britain's cloud sector, enabling them to sustain these fees without fear of losing customers.

The U.S. Federal Trade Commission heard similar concerns in a 2023 Request for Information seeking responses on cloud practices. Commenters told the FTC that egress fees "could have the effect of discouraging customers from using multiple cloud providers or switching from one provider to another." Other commenters raised similar concerns about minimum-spend contracts, arguing that discounts tied to committed spending push customers toward single-provider consolidation even when a rival offers a superior service.

Microsoft's software bundling amplifies lock-in

Egress fees work alongside other lock-in mechanisms that regulators have scrutinized. The CMA provisionally found that Microsoft charges AWS and Google Cloud higher wholesale prices for software such as SQL Server and Windows when those rivals resell it to customers, compared to what Microsoft charges its own Azure customers for the same products. This price discrimination weakens competitors' ability to undercut Microsoft's cloud offering and reinforces customer lock-in. Microsoft's dominant position in enterprise software such as SQL Server and Windows gives it this pricing leverage over rival cloud providers.

A customer running Microsoft software on Azure faces multiple switching barriers simultaneously. First, it pays egress fees to move the data. Second, if it shifts those workloads to AWS or Google, it must renegotiate software licenses at higher wholesale rates, or accept that its licensing costs will jump. Third, re-architecting applications to run efficiently on a different cloud platform requires engineering effort. Both the financial barriers and the operational barriers exist independently, but together they make departure economically irrational even when a competitor offers better service or pricing in specific areas.

The EU's coming ban on egress fees

The European Union Data Act introduced mandatory rules for cloud switching designed to eliminate cost-based lock-in. The core switching provisions took effect on September 12, 2025. Since January 11, 2024, and until January 12, 2027—the enforcement deadline—providers may charge customers only the "actual direct costs" of switching, which must be disclosed in advance. Starting January 12, 2027, providers serving EU customers will be prohibited from charging any fees for switching or egress when customers migrate to a rival provider.

The Data Act establishes four obligations on cloud providers. First, they must provide a "right to switch" by eliminating technical, contractual, and organizational barriers to migration. Second, notice periods for customer exits cannot exceed two months, with a 30-calendar-day transition window (extendable to seven months only for exceptional circumstances). Third, switching charges phase out entirely by January 12, 2027. Fourth, providers must ensure workloads produce "materially comparable outcomes" on new platforms and provide open interfaces and machine-readable export formats so customers are not locked into proprietary data formats.

This means AWS, Azure and Google Cloud will be unable to bill European customers for data transfer when those customers leave. The ban applies only to switching-related data transfers, not operational egress—a company running workloads on multiple providers simultaneously still pays standard egress rates for ongoing cross-platform data movement. But one-time migrations become free. AWS, Azure and Google announced voluntary egress-fee waivers starting in 2025, but those operated on a discretionary basis: customers had to request a waiver and wait for approval. The January 2027 deadline converts discretion into legal obligation. Companies cannot charge; customers do not need permission.