The Dirty Secret of Cloud Storage: Egress Fees
Storing data in the cloud is cheap. Getting it back out is where the real bill arrives.
For years, egress fees — the charges cloud providers levy when data leaves their network — have been one of the most controversial line items in infrastructure budgets. Amazon S3, the market leader in object storage, charges approximately $0.023 per GB for storage itself. But egress — transferring that data to the internet or another cloud — runs around $0.09 per GB. That is nearly four times the cost of storage per gigabyte transferred.
For data-heavy applications — video platforms, ML pipelines, backup services, media archives — egress can easily dwarf storage costs by a factor of five to ten. A startup storing 100 TB and serving it actively to users might pay $2,300 per month in storage fees and $9,000 or more in egress. The data is theoretically “theirs,” but retrieving it at scale comes at a steep price.
This pricing model did more than generate revenue. It created structural lock-in. Migrating a large dataset from AWS S3 to any other provider means paying egress fees on every gigabyte you move out. For many companies, the migration cost alone — before any engineering time — makes switching economically irrational. That is not an accident. It is architecture.
That architecture is now under serious competitive pressure for the first time in nearly two decades.
Cloudflare R2: The Shot That Started the War
In 2022, Cloudflare launched R2 Object Storage with a single headline claim that immediately reordered the industry conversation: zero egress fees. None. Ever.
R2 is S3-compatible — it uses the same API that AWS S3 made the de facto standard for object storage. Any application already reading from and writing to S3 can switch to R2 with minimal code changes, often just swapping an endpoint URL and credentials. Storage pricing sits at approximately $0.015 per GB, slightly lower than S3’s standard tier. But the real headline is that serving data from R2 to end users costs nothing in egress.
How can Cloudflare make this work financially? The answer lies in their core business model. Cloudflare operates one of the world’s largest content delivery networks, processing enormous volumes of traffic through their own global network. They are already paying for the bandwidth. Offering egress-free storage does not add meaningful marginal cost to their operations — it is traffic that runs on infrastructure they have already built and amortized. For AWS or Azure, by contrast, egress fees represent a significant, discrete revenue stream that funds separate infrastructure investments.
R2’s launch forced a question that cloud incumbents had successfully avoided for years: what are egress fees actually paying for?
Backblaze B2: The Price Floor for Serious Workloads
Backblaze has operated in the storage market for years, primarily known for consumer backup products. Its B2 Cloud Storage offering predates R2, but the company dramatically repositioned it as part of what became known as the Bandwidth Alliance — a partnership with Cloudflare that allows data transferred from Backblaze B2 directly to Cloudflare’s network to incur zero egress fees.
The storage economics at Backblaze B2 are striking. At approximately $0.006 per GB, B2 is currently the cheapest major object storage offering from a credible provider. Standard egress outside the Bandwidth Alliance runs $0.01 per GB — still a fraction of AWS pricing. For teams already using Cloudflare as their CDN (a common configuration), combining B2 storage with Cloudflare delivery essentially eliminates egress costs entirely while storing data at a quarter of S3 prices.
Backblaze has gained particular traction with media companies, backup services, podcast hosting platforms, and any workload where large volumes of files are served frequently. The provider’s limitations — fewer global regions than AWS, a smaller enterprise feature set — are real. But for the right workloads, the cost differential is decisive.
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AWS Response: Messaging Over Mechanics
Amazon Web Services has not fundamentally changed its egress pricing model in response to the competitive pressure from R2 and B2. What AWS has done is launch adjacent products and adjust its messaging.
S3 Express One Zone, launched in late 2023, targets low-latency, high-throughput workloads with a simplified storage class and faster performance — a product aimed at ML training pipelines rather than a response to egress economics. AWS has also extended and expanded its Free Tier offerings and leaned harder into “pay only for what you use” positioning in its marketing.
The reason for this inertia is transparent. Egress fees are estimated to contribute billions of dollars annually to AWS revenue. They are not merely a pricing quirk — they are a meaningful portion of the economics of cloud infrastructure. Any significant reduction would require either accepting revenue loss or finding replacement revenue elsewhere. For a business generating AWS’s scale of operating income, that is a strategic decision that cannot be made lightly or quickly.
AWS’s implicit bet is that enterprise lock-in, the breadth of its service ecosystem, compliance certifications, and SLA guarantees keep customers on S3 even as the pure storage economics become increasingly unfavorable.
Google Cloud and Azure: Partial Concessions
Google Cloud Storage and Microsoft Azure Blob Storage have both made incremental moves toward more competitive egress pricing without matching R2’s zero-fee model.
Google has historically offered free egress within the same region and reduced rates for data leaving to the internet in some tiers. Azure’s Blob Storage offers competitive pricing in premium tiers and has made gestures toward reducing data transfer costs in specific scenarios. Both providers have emphasized multi-regional storage products and geographic distribution as differentiators — implying that the value of their networks justifies some transfer premium.
Neither Google nor Microsoft has adopted the zero-egress model as a platform-wide commitment. For now, they occupy a middle ground: less expensive than AWS in some configurations, but still operating within the traditional egress revenue logic that Cloudflare and Backblaze have explicitly rejected.
Who Benefits Most from the Price War
The beneficiaries of this competitive shift are not uniformly distributed.
Video and media platforms see the most immediate relief. Serving video at scale means serving terabytes every day. Moving from S3 to R2 or a B2 + Cloudflare stack can convert a five-figure monthly egress bill into a rounding error.
Machine learning teams storing training datasets, model checkpoints, and inference artifacts face large-scale data movement between storage and compute. When training runs span multiple providers or geographic regions, egress-free storage materially changes the cost model for experimentation.
Backup and archival services — both businesses offering backup products and internal IT teams — benefit from Backblaze B2’s low storage floor combined with free restore via Cloudflare.
Startups in general benefit disproportionately. A startup’s S3 bill is frequently a top-three infrastructure line item within months of launch. Reducing it by 60–80% through an S3-compatible switch is pure engineering leverage with limited risk.
Enterprises with complex compliance requirements, multi-region disaster recovery architectures, or deep AWS service integration (Lambda, CloudFront, Athena) have more migration friction and may rationally remain on S3 despite the cost premium.
The Compatibility Layer: What S3 API Standardization Actually Means
Perhaps the most consequential long-term development in this story is not any single provider’s pricing — it is the emergence of S3 API compatibility as an industry standard that enables real portability.
Cloudflare R2, Backblaze B2, Wasabi, MinIO (the open-source self-hosted option), and several other providers all implement the S3 API. This means that for the majority of use cases, an application written to S3 can be redirected to any of these providers by changing a few configuration values. There is no rewrite, no new SDK, no new data model to learn.
The Bandwidth Alliance — initially formed between Cloudflare and Backblaze, now expanded to include Fastly and other network partners — takes this further by ensuring that data moved between alliance members incurs no egress fees at the network level. For teams architecting multi-cloud or CDN-adjacent storage strategies, this creates genuine flexibility that did not exist three years ago.
MinIO deserves mention as the self-hosted complement to this ecosystem. Organizations that require on-premises or private cloud storage, or that operate in regions with data residency requirements, can run MinIO to get S3-compatible object storage entirely within their own infrastructure — eliminating both egress fees and vendor dependency.
The cumulative effect is that for the first time, S3 API compatibility functions as a genuine escape valve from vendor lock-in rather than just an API convention. Switching providers is no longer a multi-month engineering project — it can be a morning’s work.
Frequently Asked Questions
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