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Welcome to the wonderful world of network peering.

I suspect Google is very transmit heavy on bandwidth usage. Peering agreements tend to sweeten as your rx/tx ratio approaches 1, so increasing rx on the network makes it easier to establish a peering arrangement, avoiding the need to purchase transit.

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Is that why download traffic (incoming data) is free on EC2?

Not really. The pricing was probably set to encourage customers to migrate their infrastructure to EC2 knowing there is no added cost uploading everything you have been storing since 1994.

Almost certainly. Many datacenters offer free incoming bandwidth either to improve their ratio or just because it doesn't actually cost them anything (e.g. they're paying for a 10gbit internet exchange port but their traffic is highly asymmetrical on the outgoing side).

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