Microsoft, IBM form pricing pact to take on Amazon Web Services

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Microsoft, IBM form pricing pact to take on Amazon Web Services

A group of cloud computing companies is taking aim at Amazon Web Services by offering free or deeply discounted rates on moving data between their cloud services.

The Bandwidth Alliance, as the group calls itself, launched on Wednesday and includes large cloud computing firms such as Microsoft's Azure and IBM Cloud, as well as independent firms such as Digital Ocean, Backblaze and Packet.

The group aims to lure customers away from AWS - the biggest cloud computing provider with US$17.5 billion in revenue last year - by challenging the AWS practice of allowing customers to move data into the AWS cloud for free but charging to move that data out.

"It's sort of the 'Hotel California,'" said Matthew Prince, the CEO of founding member Cloudflare, referring to the mythical hotel in a song by the band The Eagles where guests can check out any time they like but can never leave. "It's free to put your data in, but to get your data out, it costs a substantial amount of money. That creates a whole data gravity issue where data gets locked in the cloud."

To counter that, the companies will allow their mutual customers to move data between their services for free, or, in the case of Microsoft, for a discount of about 75 percent from the list prices. Google Cloud also offers discounts through a previously established programme with Cloudflare and others.

There's an element of self-interest for the companies involved: They all compete with AWS, and, in many cases, would stand to benefit if it were cheaper to move data back and forth between AWS and their services. And Cloudflare, which is leading the effort because its so-called content delivery network acts like a glue that connects many of the cloud providers together, competes directly with an AWS service called CloudFront.

Amazon did not have an immediate comment on the alliance. But it has inked some deals to allow customers to move data freely, such as an alliance with Salesforce.com that lets their joint customers transfer data. Microsoft, Adobe Systems Inc and SAP SE this week made a similar deal to share mutual customer data.

Prince said the Bandwidth Alliance is currently a pact among the members, but if it gains traction it hopes to spin off into its own independent association or nonprofit entity. The aim is to make it cheaper to choose from a buffet of cloud services, for example tapping Google's analytics offerings, Amazon's data storage and IBM's Watson artificial intelligence.

"You basically have to pick your provider and stick with that provider forever. We're starting to see the attitudes around that change," Prince said.

(This version of the story corrects to say Google Cloud is not a member of the Bandwidth Alliance but has its own discount programme in 5th paragraph)

(Reporting by Stephen Nellis; Editing by Sandra Maler)

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