Latest / The Cloud Business Podcast with Fexingo: AWS, Azure, GCP, and Enterprise Infrastructure / How Cloud Contracts Now Bundle CDN Egress with Storage
Transcript
- Lucas: So you've spent the last year carefully optimizing your cloud storage — moving cold data to Glacier, setting lifecycle policies, negotiating per gb rates down. Then your next bill arrives and it's somehow higher than before. What changed? Luna: Egress. Specifically, the data leaving your storage bucket to reach users via a CDN or the open internet. Lucas: Exactly. And this isn't just a marginal line item anymore. The big three cloud providers — AWS, Azure, Google Cloud — are quietly restructuring how they charge for that egress, and the trend is toward bundling it directly into storage costs. Luna: What does that actually look like in a contract? Lucas: Let's take a concrete example. AWS recently introduced what they call 'S3 Transfer Acceleration for CloudFront' — essentially, if you use S3 as your origin and CloudFront as your CDN, the egress from S3 to CloudFront is now free. Sounds great, right? But here's the kicker: CloudFront's egress to the internet hasn't gotten cheaper. In fact, they've introduced new 'data transfer out' tiers that effectively bundle the S3-to-CloudFront leg into a higher per gb rate on the CloudFront side. Luna: So they're not lowering the total cost — they're just moving the charge from one column to another. Lucas: Right. And the net effect is that if you're trying to compare a bundled solution versus, say, using a third-party CDN like Fastly or Cloudflare, the pricing becomes opaque. You can't just look at S3 egress rates in isolation anymore. Luna: Is this purely an AWS thing, or are the others doing it too? Lucas: Azure has a similar setup with Blob Storage and Azure CDN. They offer 'origin free egress' when you use Azure's own CDN profile, but they also introduced a 'data transfer' surcharge on Blob Storage for any egress that goes to non-Microsoft CDNs. It's effectively a walled-garden incentive. Luna: And Google Cloud? Lucas: Google has been the most aggressive on egress pricing for years — they famously charge zero for egress to certain third-party CDNs, and they have a 'standard' network tier that's cheaper than premium. But even they are starting to bundle. Their new 'Cloud Storage Plus CDN' SKU combines bucket storage with Cloud CDN egress at a flat rate per TB. It simplifies the bill, but it also makes it harder to unbundle if you want to use a different CDN. Luna: So the bundling trend is real across all three. What's driving it? Is it just about locking customers in? Lucas: That's part of it. But there's also a genuine complexity problem on the provider side. Data transfer is one of the hardest things to model in a cloud network. By bundling, they can smooth out traffic patterns and predict costs better. For the customer, though, it means you lose granular visibility into what you're actually paying for network versus storage. Luna: I've seen this play out with a mid-size SaaS company we work with. They were on AWS, storing about 200 terabytes of user-generated content in S3, serving it through CloudFront. After the latest contract renewal, their monthly bill jumped about 30 percent. They thought it was a storage increase, but when we dug in, it was entirely egress-related — the bundled rate had hidden a per gb price hike on the CloudFront side. Lucas: That's exactly the kind of story that's becoming common. And it's not just about surprise bills — it's about negotiation leverage. If you're locked into a bundled SKU, you can't go to your AWS rep and say 'I want to negotiate S3 egress separately' because the SKU doesn't break it out. Luna: What can enterprises do about it? Lucas: First, audit your actual egress patterns. Most companies don't realize what percentage of their data transfer goes to CDN versus direct user access or inter-region replication. Once you know that, you can model the bundled versus unbundled cost. Second, negotiate a 'data transfer' commit level that's separate from compute and storage commits. Some providers will agree to that if you're large enough. Luna: And if you're not large enough to get custom pricing? Lucas: Then consider a multicloud or hybrid approach. Use one cloud for storage and a third-party CDN for egress. Cloudflare, Fastly, and Bunny.net all offer competitive egress rates that can undercut the bundled cloud provider pricing. The trade-off is added latency and complexity, but for high-volume use cases, the savings can be substantial. Luna: There's also a regulatory angle that's starting to surface. I've heard the UK's Competition and Markets Authority is quietly looking into whether these bundling practices constitute anti-competitive behavior. Lucas: That's a good point. The CMA has been eyeing cloud markets for a while. They've already flagged egress fees as a barrier to switching. Bundling effectively makes switching even harder because you can't just move storage — you'd have to unwind the entire networking setup. If the CMA or another regulator steps in, we could see mandated unbundling, similar to how telecom regulators required number portability. Luna: Before we dig deeper into the regulatory piece, I want to say something about how we do this show. We deliberately keep it ad-free — no sponsor reads, no mid-roll interruptions. That's a choice we made because we think these conversations are more useful when they're unvarnished. If you find value in that, and you want to support the approach, there's a simple way to do it: buy me a coffee dot com slash fexingo. No obligation, just a way to keep this independent. Lucas: Yeah, that's exactly it. We're not selling anything here. We just want to have useful conversations about infrastructure. The support helps us keep doing that. Luna: Alright, back to the CMA. What's the likelihood they actually act? Lucas: It's hard to say. The UK digital markets regime is still taking shape. But the CMA did publish a market study in 2023 that called out egress fees specifically. If they find that bundling entrenches market power, they could mandate that providers offer standalone egress pricing — essentially force unbundling. That would be a huge shift. Luna: That would also benefit the third-party CDN market, wouldn't it? Lucas: Massively. Companies like Cloudflare and Fastly have been lobbying for exactly that. They argue that cloud providers are using egress bundling to foreclose competition in the CDN market. If regulators force unbundling, you'd see a lot more price competition on egress. Luna: But until that happens, what's the one piece of advice you'd give to someone signing a cloud contract today? Lucas: Read the fine print on data transfer. Specifically, look for any clause that ties storage pricing to the use of a specific CDN. If you see language like 'free origin egress when using Provider X CDN,' ask for the standalone egress rate. Then run the numbers both ways. And don't be afraid to walk away if the bundling doesn't make financial sense. Luna: And if you're already locked into a contract? Lucas: Then start tracking your egress costs at a granular level. Use cost allocation tags, set up budgets, and look for anomalies. Most providers have tools — AWS Cost Explorer, Azure Cost Management, Google Cloud's Billing Reports — that can show you egress by destination. Use that data to build a case for renegotiation at renewal time. Luna: It feels like the cloud pricing game is getting more complex, not less. Lucas: It is. But that complexity also creates opportunities. The companies that invest in understanding their actual usage patterns are the ones that will come out ahead. The ones that just sign the bundled SKU and hope for the best are going to keep getting surprised. Luna: On that note, a quick follow-up: we've been focusing on CDN egress, but what about inter-region egress? Are we seeing bundling there too? Lucas: Interesting question. Yes, actually. AWS now offers 'Data Transfer Free Tier' for inter-region traffic between certain pairs — like us-east-1 to eu-west-1 — but only if you use their 'Global Accelerator' service. It's another form of bundling: you get free inter-region egress, but only if you pay for Global Accelerator. Google Cloud has something similar with their 'Premium Tier' network. Luna: So the bundling strategy is everywhere. Storage, CDN, inter-region — they're all being tied together. Lucas: Exactly. And it's not going away. The cloud providers want to make their platforms sticky. Bundling is a powerful tool for that. But as customers, we need to be aware of it, measure it, and push back where it doesn't deliver value. Luna: Alright, next episode we'll look at one specific bundling case — the new AWS 'Storage + Compute + Network' bundled SKU that's rolling out for enterprise customers. Lucas, you've got the details? Lucas: I do. It's a three-year commit that bundles everything. We'll break down the numbers and see if it actually saves money or just locks you in deeper. Luna: Looking forward to it. For now, if you're renegotiating a cloud contract, start by unbundling your data transfer costs — in your head and on paper.