Alphabet-C terminates cloud conversion fees, putting pressure on Amazon and Microsoft

Alphabet-C, the parent company of Alphabet-C Cloud, is taking steps to address the long-standing issue of high costs associated with switching cloud service providers. These services have been criticized as "roach motels," allowing businesses to check in but not check out.

Starting from Thursday, Alphabet-C Cloud will no longer charge customers a switching fee if they wish to leave and switch to a competitor. Analysts believe that this change may force competitors Amazon and Microsoft to adopt the same approach.

This move comes in response to increased scrutiny from global regulatory agencies and lawmakers on cloud services. The UK antitrust authority has launched an investigation into such switching fees, and the US Federal Trade Commission (FTC) has sought public input on various cloud service issues, with switching fees being a key concern.

Amit Zavery, Vice President of Alphabet-C Cloud, stated that the switching fee accounts for only about 2% of the total cost for customers to migrate to a new provider, and this fee does not deter many customers from switching services. He emphasized that factors such as training and fees paid to the new cloud service provider are more significant, but Alphabet-C still wants to address these concerns.

Zavery said, "We have heard the voices of regulatory agencies and customers, and switching fees are one of the issues we want to address. Of course, we hope to encourage other cloud service providers to take the same approach."

Another reason for Alphabet-C's decision to eliminate switching fees is to draw regulatory attention to what Alphabet-C considers to be a bigger issue: certain restrictions imposed by Microsoft that make it more difficult for customers to choose Alphabet-C Cloud services. Over the years, Alphabet-C, Amazon Web Services, and their customers have complained that some of Microsoft's policies make it harder for customers to use flagship products like Windows and Office in their competitors' cloud services, and they are also more expensive, sometimes even unusable.

Microsoft has previously acknowledged that some of its products are more difficult or expensive to run on competitors' cloud platforms, but has been working to address these complaints. Although Microsoft has relaxed some restrictions in 2022, this change does not apply to top competitors Amazon, Alphabet-C, and Alibaba Cloud.

The European Union is currently investigating the issue of Microsoft bundling products into its cloud services. Zavery stated that Alphabet-C has been in communication with regulatory agencies regarding their concerns. Meanwhile, Amazon has been one of the main supporters lobbying regulators to pressure Microsoft.

"We want to ensure that our views and perspectives are heard, and we also want to hear feedback from customers," Zavery said. Currently, there is still a possibility that Alphabet-C may be excluded from some of Microsoft's businesses in the future, he added, "By the time anything happens, it may be too late."

On Thursday, Alphabet-C's stock price fell 0.35% in early trading on the US stock market, closing at $143.28. Microsoft's stock price initially rose 2%, reaching a high of $390.68, with a market capitalization of $2.9 trillion, surpassing Apple to become the world's most valuable company, but later fell 0.4% to $381.20.