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Comment by bnprks | Hacker News Reader

I hope this is just the start of egress fee changes in response to the European Data Act. Taking a look at other parts of the law's text [1], I think this change related to Article 25, but Article 34 section 2 is what really stands out to me:

> Where a data processing service is being used in parallel with another data processing service, the providers of data processing services may impose data egress charges, but only for the purpose of passing on egress costs incurred, without exceeding such costs.

Hopefully this article doesn't end up with exploitable loopholes. Bringing down AWS, GCP, and Azure egress costs to market rates could majorly help reduce cloud lock-in gradually without having to close your entire account.

[1]: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=OJ:...

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My question (and maybe it is answered there but I don't want to read a full legal document to find it).

What exactly do they consider "costs"? Is it just the cost they pay an IP for data out or can it include maintenance, hardware, people, etc?

I am also curious if this will have any impact on the cost of services. Does AWS do any sort of thing where the higher egress costs offset the cost of services? Or ingress costs, or internal communication costs? Stuff that does cost AWS something to run in some form but could have been paid for by this.

It's a question I honestly don't know, so I am curious.

I don’t work at Amazon nor am I an accountant, but likely your intuition is correct. There’s this managerial accounting strategy called activity based costing (ABC) where you can better map costs (ie real money spent on stuff) to the company outputs; in this case data egress, but it works for all activities (server maintenance, programmer time, etc). You basically take a weighted average of the time and money spent on activities to understand the cost of those activities. This is how Amazon knows the costs of all its services.

The second question is a bit trickier to answer. Amazon has a lot of fixed costs and ABC is one way to allocate those fixed costs (fixed costs = servers). You can also do something similar for the revenues of different AWS services. However, managers will tend to look at revenues and costs together because teasing apart the different revenue streams and their allocated cost structures doesn’t match reality. If you go too deep into that rabbit hole, you lose sight of the true nature of the business. Which is “we buy a shitload of servers up front and rent them to you virtually by the second.” To answer the question, the egress revenue likely dwarfs all the other revenue generating activities at AWS, making the other services look “bad” when comparing revenue to costs. On paper, egress makes up substantially all profit for the business. But this is by design- executives believe that this business model captures the most value so they’re not that interested in jacking up other service costs because overall profitability will be less. Is there subsidization? Yes, but Amazon believes they have the better business by charging users like this vs pricing everything “fairly.”

in cali the power company says "you can use this cost structure or that cost structure, your choice!" - so it's this vile little game where if you choose incorrectly they scalp you, and it takes a bit of arithmetic to compute expected values, power usage at various times of day, etc - something the average joe may not be able to estimate easily. in an ideal world, they would automatically pick the lower of the two.

to a degree I have seen AWS plans work this way, where you choose from options A/B/C and buyer beware if you end up getting scalped.

So do we know how much are the egress costs for AWS?

In other words how much AWS is overcharging?

I guess they make every effort / creative bookkeeping trick to exaggerate their egress costs and it will take years until EU completes their investigation and fines them and more years until courts have had their final word.

I have seen a rack with power and 10Gig ethernet advertised for $700 per month; so my guess is that Amazon pays less than 25 cents per Mbps per month and in some cases, nothing.

We can safely assume that almost 100% of their traffic is settlement free peered so obsensibly 'free'. They do however haul the traffic on their own backbone extensively before handing it over (which will be part of the reason for the extremely high level of settlement free). That is extensive and costly ; they lease fibres in subsea cables and in some cases part own them. Similar for terrestrial fibre. This wraps the world, so the fixed cost of that is super high, but the unit costs would be tiny. All in I'd be astonished if the weighted average for say Europe was more than 0.11 cents per GB if they are charging you 2 cents that's ~20x cost, if it's 8 cents...

https://blog.cloudflare.com/aws-egregious-egress contains a pretty good overview of Amazon’s margins.

Yes

You just have to believe that, on the scale on AWS, 1Mbps in Europe costs 0.08$ (includes the transit, the hardware, the people etc). This includes every networking parts : do not forget the switches and stuff : VPC are free, and intra-zone network is free. Someone must pay, so it is sane to assume that "someone" is partly cross-region, partly internet egress, partly cross-zone.

Don't forget the R&D that revolves around VPC, subnets, security groups, acl etc.

So, yes, 0.08$/Mbps. Known from an external source which is a (partly) competitor. Trust me, dude. This number is legit.

You only need to look at the pricing of their other competitors which comes nowhere close to the costs of AWS networking (except for Azure and GCP).

Also snarky statements such as the ones you are making do not particularly help your argument.

> 1Mbps in Europe costs 0.08$

Per month?

Anyway, I can’t tell what your point is, but keep in mind that nearly all the complexity you discuss, and nearly all the hardware needed, applies to within-AZ traffic as well, and AWS doesn’t charge for that.

Amazon builds their own switches so they are not paying some insane cost for hardware/software/support to a company like Cisco. Generic network infrastructure is dirt cheap now (take a look at fs.com). Granted it is not trivial to build your own custom switch and you need to hire some really smart people to do this but I am sure this paid off tremendously for AWS.

That number sounds in the ballpark.

There's a bunch of providers in Europe that will give you a whole server for €50/month with unmetered 1gbps networking. Or, as I like to consider it, €50/month for 1 gbps networking, and you get a free server.

Yeah, their networks may not have as much complexity and features as AWS, but I've never found any of that complexity appealing. Keep your network simple and let your hosts do the work.

Do remember this isn't the cost of an actual unmetered 1Gbps, just the part they expect you to use on average. I know Hetzner is pretty generous, but some people have been asked to reduce their bandwidth after using 250TB/month consistently for several months (that's about an actual fully utilized 1Gbps).

Average is playing here : you pay 50€/mo for 1gbps, and takes into account that most people won't use 1Gbps

It is the same for home internet connections : the offers is defined by the average use.

AWS and friends, on the other side, do not care about averages, and avoid you that burden too : what matter is how much you consumed, not "when" or "how" you consumed int

The one to watch is https://www.cloudflare.com/bandwidth-alliance/

AWS could plausibly claim _some_ additional expense on their premium network offering (not full rate, of course, but some) for the additional monitoring and adjustment they do to adjust to peering conditions but none of that is plausible for other companies peering with them who provide the same services. If their customer uses Fastly or Cloudflare, they don’t need any additional cost to toss packets over the wall and let the other service worry about routing. I’d imagine those companies are making sure that the EU regulators know exactly how much they need to charge for that.

Indeed. I think Amazon could argue that since egress rates are higher than ingress rates, effectively all their network costs are egress.

And all their network costs includes all the routers, all the fibers, all the staff in the networking and infrastructure teams, and all the teams that support those teams.

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