Cloud bills jumped 18% in 2026, but compute costs didn’t change. The culprit is a strategic pricing shift by AWS, Google Cloud, and Azure from compute to networking—implementing new IPv4 address hourly charges and egress fees that now represent 10-15% of total cloud costs. These aren’t accidents or market forces. They’re intentional revenue strategies with built-in complexity designed to obscure true costs and lock in customers.
Developers and IT teams are seeing budget overruns—62% exceeded budgets in 2026—from fees they didn’t anticipate. More importantly, these fees create exit barriers. Moving 50 TB of data to a different provider costs $3,500-$7,000 in egress fees alone, making vendor lock-in financially enforced.
The Hidden Cost Breakdown: Three Fees That Compound
Cloud providers now charge three “hidden” networking fees that compound with every operation. First, IPv4 address charges: $0.005/hour ($43.80/year) per public IP address, whether it’s actively used or sitting idle. Second, egress fees: $0.087-$0.12/GB to transfer data out of the cloud. Third, cross-zone transfer costs: $0.02/GB for internal communication between availability zones within the same region.
Combined, these fees represent 10-15% of total cloud costs on average, according to Gartner. However, for specific workloads, they can dominate budgets. One organization running an EKS cluster in AWS found cross-AZ data transfer alone consumed 25% of their cluster costs. Another company discovered egress accounted for more than 90% of their seven-figure AWS bill.
The pricing structure isn’t intuitive. AWS charges $0.01/GB for data moving OUT of an availability zone and another $0.01/GB for data moving IN to a different zone—$0.02/GB total for what looks like a single operation. Consequently, a terabyte of cross-AZ traffic costs $20, and that’s just for internal communication. Public egress adds another $90/TB on top.
Vendor Lock-In by Design, Not Accident
Egress fees aren’t about cost recovery—they’re a strategic vendor lock-in mechanism. Data ingress is free or cheap to encourage cloud migration. However, leaving is expensive by design. Moving 50 TB of data to a different provider or back to on-premises infrastructure costs $3,500-$7,000 in AWS egress fees alone at $0.07/GB. That’s just the bandwidth charge, excluding engineering time, testing, and deployment.
The economics reveal the strategy: a 32 TB physical drive costs around $700, but transferring the same amount via AWS egress costs $2,240. When scaled to hundreds or thousands of terabytes, migration becomes financially impractical. The UK’s Competition and Markets Authority investigated this, describing egress fees as a “significant barrier” to switching providers.
Moreover, cloud providers claim egress pricing reflects infrastructure costs, but market IP transit rates are $0.001-$0.002/GB—45-90x lower than AWS’s $0.09/GB egress charge. The markup isn’t cost-based. It’s strategic pricing designed to make leaving prohibitively expensive. AWS and Google announced egress fee waivers for customers migrating away, but the conditions are strict: account termination within 60 days, one-way only, no return allowed. Too little, too late.
The IPv4 Idle Resource Tax
IPv4 addresses became 300% more expensive to acquire over the past five years—from roughly $15 to $60 per address. Consequently, cloud providers responded by implementing hourly charges: AWS, Google Cloud, and Azure all charge $0.005/hour ($43.80/year) per public IPv4 address starting in 2024. The catch? They charge even for idle or unattached addresses.
Organizations that allocate IPv4 addresses liberally during development and never clean them up accumulate waste. Unlike EC2 instances that get shut down, IP addresses remain allocated indefinitely. Furthermore, one hundred unused elastic IPs cost $4,380 annually for resources that deliver zero value. This is a tax on inefficiency, penalizing organizations that don’t actively audit infrastructure.
Finding idle addresses requires manual work or automation:
# List unattached Elastic IPs costing $43.80/year each
aws ec2 describe-addresses --query 'Addresses[?AssociationId==null]'AWS Free Tier includes 750 hours per month of IPv4 for the first 12 months only. After that, charges apply immediately. Many developers are surprised by IPv4 charges appearing after the free tier expires, discovering hundreds of dollars in monthly fees they didn’t budget for.
Cost Reduction Strategies: 30-80% Savings Possible
However, cloud networking costs aren’t inevitable—they’re architectural choices. Organizations can reduce costs by 30-80% through targeted optimizations. CDN implementation is the quickest win, reducing egress by 30-50% by caching content at the edge instead of serving every request from origin. Additionally, data compression via Gzip or Brotli reduces payload sizes by 20-40% before transfer, turning paid bandwidth into free CPU cycles.
Furthermore, regional consolidation eliminates cross-region fees entirely by keeping related services in the same geographic region. Moreover, one Kubernetes user reduced cross-AZ costs by 80% using Kubernetes 1.33’s new trafficDistribution feature, which implements topology-aware routing to prefer same-zone targets over cross-zone alternatives.
Additionally, for workloads with high egress relative to storage, egress-free alternatives change the economics entirely. Cloudflare R2 offers unlimited free egress with $0.015/GB/month storage. Backblaze B2 provides 3x free egress (1 TB storage = 3 TB free egress/month) at $6/TB/month storage. OVH removed egress fees entirely in January 2026, directly challenging AWS pricing.
The comparison is stark for public content delivery:
| Provider | 10TB Storage | 50TB Egress | Total Monthly Cost |
|---|---|---|---|
| AWS S3 | $230 | $4,500 | $4,730 |
| Google Cloud | $200 | $6,000 | $6,200 |
| Cloudflare R2 | $150 | $0 | $150 |
| Backblaze B2 | $60 | $1,400 | $1,460 |
Moreover, all four providers offer S3-compatible APIs, making migration straightforward. The trade-off is fewer integrated services—no Lambda equivalent, no Athena equivalent. However, for storage and delivery workloads, the savings are 70-97%.
Key Takeaways
- Cloud networking fees compound quickly. IPv4 charges ($43.80/year per IP), egress fees ($0.09/GB), and cross-zone costs ($0.02/GB) combine to represent 10-45% of cloud bills depending on workload architecture.
- Exit costs create financial lock-in. Moving 50 TB of data costs $3,500-$7,000 in egress fees alone—not a technical barrier, but an economic one. Calculate egress costs before committing significant data to any cloud provider.
- Audit unused IPv4 addresses quarterly. Idle elastic IPs cost $43.80/year each. Organizations with hundreds of forgotten allocations pay thousands annually for zero value.
- Architectural choices drive 30-80% cost reductions. CDN implementation (30-50% savings), data compression (20-40%), regional consolidation, and topology-aware routing transform economics without changing functionality.
- Egress-free storage alternatives exist. Cloudflare R2 and Backblaze B2 offer S3-compatible storage with free or heavily reduced egress. For high-egress workloads, savings exceed 70%. The break-even calculation is simple: if annual egress costs exceed 3x the cost of alternative solutions, migrate immediately.
