Azure IaaS News: At-Cost" Data Transfers Between Clouds

In parallel to Google's Data Transfer Essentials, Microsoft announces an extension of its credit program to compensate for data transfers between Azure and other cloud providers via the public internet. Intended for organizations and CSP partners established in Europe (EEA, EFTA, and United Kingdom), this measure significantly reduces network billing during cross-cloud data movements.

Until now, all outbound traffic billed according to Azure Internet transfer standard rates could represent a high expense item, hindered by growing volumes due to the implementation of multi-cloud or hybrid architectures. The new mechanism relies on an "at-cost" calculated credit, reimbursable upon request via Azure Support, provided eligibility criteria are met and required documentation is provided.

Key Points to Know

  • Credits apply to data transferred "outbound" from Azure to another cloud platform over the public internet
  • Organizations must open a Support ticket to request the credit and demonstrate their on-site billing
  • The offer aims to encourage distributed and multi-cloud architectures by mitigating network surcharges for Europe-based customers

It's a race against the law

The EU Data Act, which entered into force in January 2024, establishes a clear timeline for eliminating cloud vendor lock-in through switching costs. The regulation operates in two distinct phases:

Phase 1 (January 2024 - January 2027): During this transitional period, cloud providers can still charge switching fees, including data egress costs, but these charges must be limited to "actual direct costs" incurred by the provider. This means no profit margins, no administrative overhead charges—just the raw cost of data transfer.

Phase 2 (Post-January 2027): Complete prohibition of any switching charges. Cloud providers cannot impose any fees for data portability or service switching, effectively making multi-cloud strategies and provider changes financially frictionless for customers.

Microsoft's "at-cost" credit program directly addresses Phase 1 requirements while preparing for Phase 2 realities. By implementing this system now, Microsoft demonstrates proactive compliance and gains operational experience in managing what will become mandatory cost structures.

Eligibility Requirements:

  • Geographic restrictions: Only organizations with billing addresses in the EEA, EFTA, or UK qualify for this program. Companies that have opted to store their customer data outside these regions are not eligible.
  • Network routing limitations: The credit exclusively covers internet egress traffic routed through standard ISP networks. Data transfers using Microsoft's Premium Global Network are excluded unless the specific service is unavailable on the ISP pathway.
  • Same-organization requirement: Data must be processed at the destination by the same organization that initiated the transfer. Third-party scenarios like CDN content delivery are not covered, and transfers between different customer endpoints don't qualify.
  • Review and compliance: Microsoft will evaluate each request to ensure it meets all documented requirements. Requests that don't follow the proper process or guidelines may be denied.
  • Policy flexibility: Microsoft reserves the right to modify the egress credit policy and its terms in the future.
  • Partner responsibility: For customers purchasing Azure services through partners or resellers, the partner must submit the credit request on behalf of the customer and handle the credit distribution once approved.

Our opinion

This type of initiative responds to a growing need for flexibility among European enterprises seeking to simultaneously leverage multiple public and private clouds without suffering "double billing" for transfers. To maximize impact:

  • Map inter-cloud data flows within your infrastructure
  • Define cross-cloud replication or backup scenarios and quantify potential savings related to "at-cost" credits
  • Plan an integrated operational process for credit requests and documentation validation

Implications for IaaS architectures and recommendations

Microsoft confirms its ambition to facilitating multi-cloud collaboration for European enterprises, a great thing for everyone. At Cloud Mercato, we recommend:

  • Submit a request for enable discount on your multi-cloud link
  • Conducting a FinOps audit to discover new areas of cost reduction allowed by multi-cloud

Source