In the cloud, the trap of free credits

AWS, Azure, Google … Large clouds offer start-ups free access to their services for months or even years. The danger? Be a prisoner.

“The‘ cloud credits ’ […] is equal to disposal. Offered on a massive scale in the European digital ecosystem, these free offers are neither framed, nor limited, nor subject to taxation or subject to transparency obligations ”, the Renew Europe group launched in the European Parliament during a questionnaire issued to the European Commission in October 2021. As digital innovation is being pushed in the face of the Covid crisis, the question is controversial: “Cloud giants are taking advantage of their dominance to distribute credit en masse to handle start-ups . We are talking about tens, hundreds, even millions of euros in some cases distributed free of charge to each company. Which small publishers obviously cannot afford ”, argues Christophe Grudler, MEP for the Territory of Belfort, member of Renew Europe.

“This is the first shot of heroin”

In the National Assembly, same story. “Companies always have a tendency to offer product samples, in perfumes for example or otherwise”, recalled Philippe Latombe, Deputy Specialist of Modem on digital topics at the law commission. “When it comes to time-limited, number-limited samples that are relatively low value, it’s advertising, so there’s no problem. But when those offers become massive, in the long run, with key valuable values, it’s no longer. “

Gafam is clearly issuing cloud credit to gain market share. But to also link start-ups to their proprietary platform with a vendor locking logic. “This is the first injection of heroin. It is so simple to use their proprietary solutions and so cheap that young shoots are likely to favor them at risk then become submissive to these actors”, continues Philippe The fall. A logic that has reached its climax in pricing outgoing data providers at high levels, as is the case with AWS.

NLP Cloud uses them in bulk

API platform oriented automatic language processing (NLP), the French NLP Cloud makes extensive use of cloud credits. The Grenoble start-up consumed nearly 73,000 euros in free credits, including the equivalent of 36,000 euros on Scaleway (over a year), 25,000 dollars on AWS (over two years), 10,000 euros on OVHCloud (over a year) and $ 2,000 Google (over a year). “These credits that we get online in a few days or even a few hours are a good thing for a start-up like us that has chosen not to raise funds to maintain its independence,” explains Julien Salinas, founder of the NLP Cloud. “Credits represent a roundabout way of benefiting from a seed fund raising without incurring the disadvantages and barriers associated with obtaining capital by one or more third parties.” A lever that largely allows the NLP Cloud to take advantage of the power of the server to train and represent its machine learning models. However, Julien Salinas knows the trap that this solution can represent.

With regard to the subject, the competition authority in France issued an internal request on January 27, 2022 with the aim of “studying the competitive operating conditions of the cloud computing sector.” Topics in the table include: business skills. Following an extensive public consultation to be held next summer, the final conclusions of its investigation are expected in early 2023. “The competition authorities of other EU countries, as is already happening in Hollande, must also take the issue to themselves, which will lead to convergence at the European level ”, hoped Philippe Latombe, who saluted the courage of the French Authority. “It is independent, there are no orders to receive from Bercy or anyone. If it considers that these practices are counter-competitive within the current legislative framework, it can impose penalties. If it is no longer legislative. basis to do so in the competition code as it exists today, it may recommend in its report to the legislature to amend the law accordingly, with proposals to principle it is not a sample, but an aid in disguise, it will be able to act directly. “


For the French deputy, the answer will not come directly from the government. “The State needs to digitize itself quickly. However, as in the 1980s at IBM, it prefers to favor the American leader with workstations, which are easy to deploy and known to all. The State is therefore de facto facto pro -Microsoft It’s not for nothing that the government pushed Capgemini and Orange to join forces with Microsoft to make Blue (Read the article Capgemini and Orange create the sovereign cloud Azure and Microsoft 365tala). Self-referral from the Competition Authority is very good news, “Philippe Latombe concluded.

“Monitoring is good, but most of all we need to adjust to set fair and lasting rules of the game”

For MEP Christophe Grudler, it’s important not to ban cloud credits that “help to create value”, but instead to regulate them. “The European Commission assures us by claiming to monitor anti-competitive behavior in the Union’s internal market, and to be prepared to act if necessary in the event of a common market breach” , analyzes Christophe Grudler, before announcing: “Monitoring, that’s good, but more importantly we need to regulate in order to set fair and lasting rules of the game for everyone, beyond the potential penalties that can be decided by the local competition authority or by the Commission. ” According to Christophe Grudler, this regulation could be part of the Data Act, a bill to be tabled on February 23 by the European Commission, and aims to achieve a data market.

The honorable member has some ideas. First, he suggests subjecting cloud credits to a 20% value added tax (which makes sense because they help create value). But there is an exemption that is less than a certain degree. “Let’s put 10,000 euros per customer per year. This will favor small or medium -sized providers in their cloud credit policy against larger ones that will actually be pushed to reduce airfoil”, Christophe Grudler summarized. Faced with the negative consequences of cloud credits in terms of vendor locking, the Data Governance Act should set conditions for migration from one cloud to another to facilitate application porting and thus unlocking the padlocks of the providers. “At the same time, new mechanisms will need to be implemented to support change in digital technology to balance this oversight”, added Christophe Grudler.

A solution to avoid the trap

At NLP Cloud, we found the solution to avoid the trap. “From the beginning, we decided to design a multicloud architecture to avoid any dependency,” explains its founder. The start-up platform is designed to prevent any compliance. By relying on an overlay of software infrastructure based on Docker Swarm (an orchestrator that is easier to learn than Kubernetes), NLP Cloud can provide this processing to any provider. “Suddenly we are completely free. At any time we can unbrail others”, insisted the CTO. “However, you need to know how to resist platform salespeople who encourage you to use their proprietary services, and above all to know that it’s free money, and therefore don’t abuse it.”

For Philippe Latombe, the ambition of hyperscalers could be more. “I think cloud credits are a way for them to identify high-potential start-ups,” the French MP said. “Once these actors are identified, they can be closer to them, even buy them, or kill them if necessary. Let’s not forget that predation is a method that is commonly practiced across the Atlantic.”

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