CEF.UP – ECO Seminar

Tuesday – April 1^st 2025, at 13:00h | Room 305

Should Egress Fees Be Eliminated? An Analysis of Cloud Services and Beyond

Andrea Mantovani – TBS – Toulouse Business School (France), Toulouse School of Economics (France) and University of Bologna (Italy)

Abstract:

“As cloud computing continues to expand, it has drawn significant attention from policymakers due to concerns over market concentration and potentially controversial practices employed by dominant providers. In this paper, we examine the impact of egress fees, which are imposed on users when switching providers. Using a simple two-period duopoly model, we analyze their effects on firms and society. Our findings reveal that cloud providers have strong incentives to implement egress fees, particularly under short-term contracts and in competition with smaller fringe providers. In such scenarios, users are notably disadvantaged by the presence of egress fees. While banning or efficiently capping these fees could enhance consumer surplus, it may also prompt cloud providers to increase switching costs for users, especially if these costs are relatively inexpensive to impose.”