AWS logo./Courtesy of Reuters

Amazon Web Services (AWS), Microsoft (MS), and Google, the global cloud service 'big three,' are raising fees for enterprise services or are establishing new pricing plans. This is seen as a measure by U.S. big tech companies, which are competing to build artificial intelligence (AI) infrastructure such as data centers, to expand revenue from their cloud business as a means to secure investment funds.

However, voices in the IT industry are questioning whether AWS, MS, and Google are unilaterally raising prices through what is referred to as 'abuse of power,' taking advantage of the fact that cloud customers cannot easily switch to competitors' services. Once a company builds a system using cloud services, transferring to another cloud service can result in significant time and expense for data transfer. In the domestic market, AWS, MS, and Google hold a market share of 75% (Ministry of Science and ICT data).

◇ AWS, MS, Google, enterprise service fees raised by up to 20%

According to the industry on the 31st, AWS has revamped its enterprise login security service, Cognito, for the first time last month. Previously a single pricing plan, Cognito has been restructured into three tiers: Light, Essential, and Plus. Both the lowest tier, Light, and the mid-tier, Essential, are free for up to 10,000 monthly active users (MAU), but exceeding this incurs higher expenses compared to the single pricing plan. The single pricing plan charges $0.005 per login when daily login users exceed 50,000, while the newly established Light and Essential pricing plans will charge $0.0055 and $0.015 per login, respectively, after exceeding 10,000 users. However, users who have been using Cognito since November of last year can continue to use the service at the existing rate.

MS announced it will raise the price of its enterprise Microsoft 365 service by about 5% starting in April, depending on exchange rates and local pricing policies. This comes nearly a year after a 10% price increase in February of last year. The price of the Teams phone video conferencing service is also expected to increase for the first time since its launch in 2017. MS has also indicated that it will raise the price of its AI-based data analysis service, PPU, from the previous $20 to $24. This month, MS raised the price of its workplace software 'Microsoft 365' for personal and home use in the U.S. for the first time in 12 years.

Google announced plans to raise the subscription price of its cloud-based collaboration tool 'Workspace' again on the 17th, after two years. In April 2023, Google had raised prices for some Workspace plans by up to 20%. It has been reported that the increase in fees is due to the inclusion of the AI service Gemini into the Workspace service. The lowest tier, Business Starter, will rise from $6 to $7, a 16% increase, while the mid-tier, Business Plus, will increase from $18 to $22, a 22% rise. Information on the top-tier Workspace Enterprise pricing has yet to be disclosed.

◇ Big tech in fierce competition for AI infrastructure... South Korean customers face double difficulties with 'King Dollar'

Recently, U.S. big tech companies have been pouring astronomical investments into expanding AI infrastructure. In May of last year, MS announced plans to build a data center in Thailand and provide cloud and AI infrastructure. Google also revealed a $2 billion (approximately 2.902 trillion won) investment plan for a data center and cloud infrastructure in Malaysia during the same month. Subsequently, it completed its fourth data center in Singapore, bringing its total investment in Singapore to $5 billion (approximately 7.255 trillion won). AWS plans to invest $8.87 billion (approximately 11.7 trillion won) in cloud infrastructure in Singapore. Data centers are essential facilities that collect the data necessary for AI reasoning and learning in one place.

Kang Myung-soo, vice president of the Korea Cloud Association, noted, 'It seems that big tech companies are raising the fees for enterprise cloud services due to the burden of power expenses from infrastructure investments and data center operations.'

As big tech companies raise fees for enterprise cloud services, the burden on domestic customers is expected to increase. This is because AWS, MS, and Google are not only reflecting the increase in the won-dollar exchange rate in their fees but also independently raising fees.

Chae Hyo-geun, vice president of the IT Service Industry Association, explained, 'For South Korean corporations that rely heavily on cloud services provided by U.S. big tech, the increase in exchange rates and service fees will act as a double burden,' adding, 'In reality, once corporations choose a service, it is not easy to change the system; therefore, even if fees rise, they have no choice but to continue using the service.'