Price rises on the horizon for Chinese cloud firms after Google and AWS set new rates

Google on Tuesday announced price rises of up to 100 per cent for certain services, effective May 1. For example, North American users of the CDN Interconnect, Direct Peering, and Carrier Peering services will pay US$0.08 per gigabyte, double the current rate. In Asia, the charge will be US$0.085 per gigabyte, up 42 per cent.

Similarly, AWS earlier this month raised the price of its “EC2 Capacity Blocks for ML” service by about 15 per cent across all regions. The service reserves accelerated compute instances to run machine learning workloads.

“The price increase stems from dual pressures of rising costs and surging demand,” said Liu Lihui, research director at market research firm IDC China. “On one hand, higher prices for upstream servers, storage, and memory, coupled with escalating electricity and energy costs, have driven up computing service expenses. On the other, corporate demand for AI computing power continues to grow rapidly.”

The increases “have broken the long-standing convention that prices [of cloud services] only go down and never up”, according to a research note by Everbright Securities.

IDC’s Liu added that “several Chinese cloud service providers are also evaluating and following up on this round of price increases, with a greater emphasis on assessing the impact of upstream hardware supply chains in their considerations”.