EU Data Act sets deadline for zero cloud exit fees. Providers lean on long contracts to keep customers
Daniel Simon ·
Europe’s cloud portability law is about to collide with the standard contract playbook of the largest providers. The EU Data Act requires cloud companies to phase out data egress fees and make customer switching workable on a clear timeline.
Regulation EU 2023/2854 mandates that cloud switching charges be capped from 2025 and reduced to zero by 2027 under Chapter VI on switching and interoperability. Articles 23 to 26 set obligations on contract terms, technical interfaces, and fees. The European Commission has said it will issue guidance and secondary measures to police compliance.
Independent findings show why fees are not the only barrier. Ofcom’s Cloud Services Market Study final report from October 2023 identified egress charges and committed spend discounts as key obstacles to switching in the United Kingdom. Ofcom referred the market to the Competition and Markets Authority, which opened a competition investigation into public cloud infrastructure and has highlighted long term discounts and software licensing restrictions as concerns in statements of issues published in 2024 and updated this year.
Contract materials from the largest providers point to how those incentives work. Amazon documents for Savings Plans explain that customers commit to fixed levels of spend for one or three years and must pay regardless of actual use. Microsoft materials for the Microsoft Customer Agreement and Azure consumption commitments describe multi year credits that require customers to consume Azure services within set periods. Google Cloud documentation for Committed Use Discounts states that customers agree to set resource levels for one or three years and cannot cancel without paying for the full term.
The switching incentives that have been announced sit alongside those commitments. Google Cloud’s data transfer initiative waives some egress charges for customers that move workloads off Google, under conditions. Rivals have introduced similar programs, according to their service pages, but none change the economics of long term discounts that reduce headline prices while raising the cost of exit mid contract.
European cloud providers and trade groups argue that the economics still favor incumbents. CISPE, which represents many European providers, has filed complaints about software licensing and contractual lock in, and welcomed the Data Act’s switching chapter as a potential equalizer. Several national procurement authorities have issued guidance that discourages unbalanced committed spend for public sector buyers, citing Ofcom’s findings.
The stakes are immediate for large enterprises that face renewals in late 2026 and 2027. Smaller providers such as OVHcloud and Scaleway say they see interest from customers that want multi cloud or sovereign options but cannot move until commitments lapse. Publishers of software that runs on cloud report that customers fear unexpected charges if they rebalance workloads between providers before commitments expire.
Enforcement is the next test. The Data Act’s switching provisions start to bite from 2025 with fee caps and then require zero switching charges by 2027. The Commission’s new guidance and any delegated acts will set the evidentiary bar for compliance audits of tariff sheets and contract terms. In the United Kingdom, the CMA is expected to propose remedies from its cloud investigation later this year. Contract language on committed spend and software licensing will determine whether portability in Europe becomes a practical right or remains a paper promise.