Enterprise Amazon Cloud

AWS Customers Rack Up Hefty Bills for Moving Data

There are a lot of ways companies can rack up high bills for using cloud services, sometimes unexpectedly. One particularly stiff expense is the cost of shifting data from one cloud provider’s servers to another provider, or to a company’s own data center. The Information has learned just how much some companies have had to pay for these “data transfer” costs, as they’re called.

The chart above shows how much 10 of the top customers of Amazon Web Services—the dominant cloud provider—paid for data transfer services in 2017 and 2018. The chart, which is based on internal AWS sales figures obtained by The Information, show that data transfer charges for one customer, Apple, approached $50 million in 2017. That represented about 6.5% of Apple’s total AWS bill of $775 million for that year, the sales figures show.

Seven of the 10 companies saw increases of at least 50% in their AWS data transfer bills last year compared to the year before. 

The Takeaway
• ‘Transfer fees’ stem from moving data to new geographies, out of AWS
• Apple saw nearly $50 million in such fees in 2017
• Pinterest, Netflix, others saw transfer fee increases of over 50% last year

It couldn’t be learned why the companies on our list had such hefty data transfer bills. The charges can stem from growth in the number of users on a company’s web service, longer-than-average usage sessions and the addition of data-intensive features such as video, said Miles Ward, CTO at Sada Systems, a company that works with Google Cloud customers. 

The size of these costs has long been an issue for corporate customers of public cloud providers. AWS, Microsoft and Google all let companies move their data into the cloud for free. But moving data out—what are called “egress fees”—can be high enough to deter customers from doing so. But companies can incur data transfer fees from their cloud providers for other reasons, including when they move large amounts of information to servers in a new geographic location to speed up internet services there. 

While the data transfer costs have caught some customers flat-footed, they haven’t been enough to deter most companies from flocking to cloud services, which many corporate customers have found more flexible and cheaper overall than running their own computers. Still, even innovative new technologies have hidden or overlooked costs that only become more apparent over time.      

Recouping Costs

The charges don’t appear to be a case of cloud providers gouging their customers. Cloud providers need some way of recouping the costs associated with moving customer data from one location to another. A person close to AWS said its data transfer charges reflect a range of technology costs customers would normally pay if they weren’t using cloud services, including fiber optic connections, networking hardware devices and software, cybersecurity services and network monitoring software. Google and Microsoft also charge data transfer fees.

“The charges reflect the tradeoff companies make in exchange for getting the benefits of the cloud model, such as paying only for what you use and paying for services incrementally instead of all at once in advance,” said Patrick McClory, founder and CEO of IntrospectData, an AI-focused technology services firm. 

Typically, customers pay only pennies per gigabyte of data moved, with charges kicking in after a small allotment of free transfers. At the huge scale many top customers operate at though, the fees can add up. For 2018, Pinterest had the highest overall AWS data transfer bill on our list at $26.4 million, up 78% from its $14.7 million bill in 2017, according to the AWS records seen by The Information.

Capital One’s data transfer charges grew 181% to $4 million in 2018 from the prior year, while Snap’s grew 588% to around $9.2 million in 2018 from the year before. Airbnb saw its data transfer bill rise 163% to $14.1 million in 2018 from 2017, according to the records.

Companies can get hit with data transfer fees when they back up data, so they store data in multiple data centers across geographic regions to ensure that an application remains available during service outages. In the case of Pinterest, for example, its bill shot up over a period when its active monthly users jumped to 265 million at the end of 2018 from 175 million at the start of 2017, according to its regulatory filings. 

For other customers, the fees could indicate they are moving some of their cloud operations out of AWS. Apple, for one, sharply scaled back its usage of Amazon’s cloud service between 2017 and 2018, as The Information has previously reported. Instead, it began operating more of its own cloud storage, a move it made to ensure better performance for users in certain geographical regions and also to gain more leverage in negotiations with cloud providers.

Apple’s Big Bill

The whopping $50 million data transfer bill Apple received from AWS in 2017 could reflect that decision. Apple’s charges plummeted to $4 million last year, according to the records seen by The Information.  

The charges represented a small portion of the customers’ overall AWS bills—some of which The Information has previously reported—during 2018 and 2017. The data transfer fees likely reflect heavy discounts that big companies often negotiate with AWS, one cloud industry analyst said.

Still, AWS data transfer fees vary depending on where customers are moving their data. Figuring them out can be challenging for cloud customers, so much so that one cloud consultant created an intricate diagram to help clarify them.

To better manage data transfer costs, AWS advises companies to use services like Direct Connect, which creates a private connection between AWS and the customers’ private data centers, reducing bandwidth charges from internet providers, the person close to AWS said.  AWS also recommends they use CloudFront, a content delivery network service, which helps minimize the distance data has to travel, the person said.

Spokespersons from Apple, Adobe, Netflix, Intuit, Airbnb and Pinterest declined to comment. Spokespersons from Salesforce and Snap didn’t have a comment. Spokespersons from Workday and Capital One didn’t respond to requests for comment. 

Spokespersons from Microsoft and Google Cloud declined to comment.

Kevin McLaughlin has been a reporter at The Information since 2016, covering cloud computing, enterprise software and artificial intelligence. He is based in San Francisco and you can find him on Twitter @ KevKubernetes.
Amir Efrati is executive editor at The Information, which he helped to launch in 2013. Previously he spent nine years as a reporter at the Wall Street Journal, reporting on white-collar crime and later about technology. He can be reached at [email protected] and is on Twitter @amir