By delving into the dynamics of cloud data economics and highlighting the disparities between data ingress and egress costs we can see that they have profound implications for market competition and technological advancement. From regulatory scrutiny to strategic shifts in pricing models, the path to a more competitive cloud landscape will help businesses truly harness the power of cloud technology to drive innovation and growth.

The Competitive Landscape: Innovation, Pricing, and Market Power

Competition stands as the cornerstone of value creation in product markets, driving innovation, technological advancements, and favorable pricing structures. In IT, where cloud services hold sway, the dynamics of competition are equally vital. However, recent trends have shown a concerning shift away from healthy competition, paving the way for market concentrations that prioritize corporate interests over customer needs.

Imbalance in Cloud Data Costs: A Barrier to Competition

One glaring example of this phenomenon is the disparity between ingress and egress costs for data in cloud computing. While public cloud providers often offer data ingress at no charge, they impose significant fees for egress, effectively creating a financial disincentive for users to switch providers. This practice stifles competition among cloud platforms, particularly concerning systems reliant on large data volumes.

Implications for Technological Advancement

The repercussions of this imbalance extend far beyond mere financial concerns. Technologies such as analytics, generative AI, and foundational model tuning rely heavily on access to extensive datasets. Any constraints on data availability directly impede the progress and potential applications of these cutting-edge technologies, impacting organizations’ ability to harness their full potential.

Industry Response and Regulatory Scrutiny

Recognizing the detrimental effects of such practices, regulatory bodies and industry players have begun to take action. Investigations by organizations like the UK’s Competition and Markets Authority (CMA) and initiatives such as the Cloudflare Bandwidth Alliance underscore a growing commitment to minimizing constraints on data mobility within cloud environments.

Google’s Proactive Step: Removing Data Transfer Fees

In a recent development, Google announced the removal of data transfer fees for customers migrating away from Google Cloud. This proactive measure aligns with the evolving landscape of customer demands and signifies a constructive response to the challenges posed by imbalanced cost structures. By eliminating financial barriers, Google not only enhances its competitive positioning but also empowers organizations to leverage cloud services more effectively.

Embracing Data Freedom

Technology providers, such as Cirata, that are leading advocates for data freedom, echo the importance of unrestricted data mobility in driving technological innovation. Their vision aligns with the evolving trends in cloud computing, emphasizing the need for seamless data integration and accessibility across platforms. By embracing such data integration platforms, organizations can mitigate risks, maximize efficiency, and capitalize on the evolving capabilities of cloud technology.

Looking Ahead: Towards a More Competitive Cloud Landscape

As cloud providers continue to respond to customer demands for fairer pricing and enhanced data mobility, the landscape of cloud computing will undergo significant transformation. Businesses evaluating cloud service providers stand to benefit from these shifts, gaining greater flexibility and value in their IT strategies.

The imperative to address imbalanced cost structures in cloud data management is clear. By fostering a more competitive environment, where customer needs take precedence, stakeholders across the IT industry can unlock the full potential of cloud technology and drive innovation at scale.

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The need to remain competitive and cater to increased user demands has prompted a 15% jump to 37% of companies saying they plan to move business-critical applications to the cloud in 2020-21, compared to the previous year. As digital leaders build robust digital infrastructures to ensure future success, it is estimated that almost half (47%) of their IT infrastructure globally is now on the cloud, despite ongoing concerns over cloud security. These findings come from Equinix’s annual global study of the views of 2,600 IT decision-makers across the Americas, Asia-Pacific and EMEA—the Equinix 2020-21 Global Tech Trends Survey (GTTS).

Since the outbreak of the global COVID-19 pandemic, the risk of cyberattacks has greatly expanded at the digital edge. Cybercrime costs the world economy more than $1 trillion with the average cost to organizations estimated to be more than half a million dollars per incident. Risk has been compounded by the large number of companies quickly shifting network capacity to cater to increasing volumes of remote worker data traffic. This has prompted a surge in cloud migration and broad implementation of cloud-based digital infrastructure as part of a hybrid infrastructure strategy.

Balancing cybersecurity concerns with cloud adoption in a digital-first world

Jennifer Cooke, Research Director, Edge Strategies, IDC, states: “Shifts in population centers, the increasing occurrence of cyberattacks, rapidly expanding data volumes and compliance needs, the creation of business ecosystems, and the transformation to digital business, have been driving the need for a new approach to digital infrastructure. These market forces are driving IT leaders to consider the best strategies and prioritize investments across the digital core, edge, and exchange of data.”

The GTTS found 70% of respondents believe migrating to the cloud is a top priority, with 80% focused on digitizing their IT infrastructure. This move is not being made lightly, with the threat of data leaks/cyberattacks as a result of increased cloud adoption being perceived as one of the biggest threats to organizations in all three regions: 52% AMER, 50% AP, 45% EMEA.

These concerns are not without merit. The Global Interconnection Index (GXI) Volume 4, a market study published by Equinix, revealed a growth in the number of user devices and cloud resources, meaning organizations have to be aware of distributed security risks such as DDoS attacks, which have grown over 270% year-over-year.

Michael Montoya, Chief Information Security Officer, Equinix, said: “Digital transformation is essential for business survival. Every company is becoming a software company and the pandemic has accelerated the need for digital transformation.” Indeed, findings from the 2021 Gartner^® Board of Directors Survey* show 69% of boards accelerated their digital business initiatives in the wake of COVID-19.

“Moving to the cloud is at the heart of this transformation. However, as our GTTS shows, many digital leaders remain nervous about this migration, with IT decision-makers highlighting fears around increased data leaks and security breaches.”

“Cyber hygiene remains vitally important in the cloud. Equinix offers a robust and interconnected platform which allows for the direct and secure exchange of data between businesses. Equinix Fabric enables connectivity to global digital business ecosystems and a myriad of cloud service providers. As a Chief Information Security Officer, I now have the assurance that my cloud deployments avoid the public internet and the associated cyber risks.”

Stacy Hayes, Co-Founder and Executive Vice President, Assured Data Protection, added: “Equinix and Equinix Fabric enabled us to deliver our Rubrik Cloud services over a fast, scalable and secure interconnection platform, with access to multiple hyperscaler clouds, that will not only protect our customers’ data today, but also give them much more value from their data in the future.”

Other findings of note from the Global Tech Trends Survey include:

• 80% of IT decision-makers said digitizing their IT infrastructure is a top priority, with 76% working to improve user experience.
• Almost half (48%) of respondents said they believe the threat of data leaks and cyberattacks as a result of cloud migration to be one of the biggest threats globally.
• 81% of digital leaders said they are prioritizing improving their organization’s cybersecurity—a significant increase from the 70% who said this in the 2019-20 edition of the survey.

To read more about the Global Tech Trends Survey, or download a copy, please visit: https://www.equinix.com/resources/infopapers/equinix-tech-trends-survey

About the Equinix 2020-21 Global Tech Trends Survey (GTTS)
The independent study, commissioned by Equinix, surveyed 2,600 IT decision-makers in diverse enterprises across the Americas (Brazil, Canada, Colombia, Mexico, U.S.), Asia-Pacific (Australia, China, Hong Kong, Japan, South Korea, Singapore) and EMEA (Bulgaria, Finland, France, Germany, Ireland, Italy, Netherlands, Poland, Portugal, Spain, Sweden, Switzerland, Turkey, UAE, UK). Respondents were selected for participation from Dynata’s online panel. The survey was conducted online between December 17, 2020, and January 8, 2021.

*Gartner, Press Release, Gartner Says 69% of Boards of Directors Accelerated Their Digital Business Initiatives Following COVID-19 Disruption, September 30, 2020.

Image licensed by pixabay.com

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