Protocol | Enterprise

Cloudflare’s Matthew Prince: ‘We’re aiming to be the fourth major public cloud’

With its new low-cost R2 cloud storage service, Cloudflare is jumping into direct competition with the AWS service that launched the cloud computing revolution.

Cloudflare CEO Matthew Prince

Cloudflare will not charge data-egress fees for customers using R2, taking direct aim at the fees AWS charges developers to move data out of its widely popular S3 storage service.

Photo: Martina Albertazzi/Bloomberg via Getty Images

Cloudflare is ready to launch a new cloud object storage service that promises to be cheaper than the established alternatives, a step the company believes will catapult it into direct competition with AWS and other cloud providers.

The service will be called R2 — "one less than S3," quipped Cloudflare CEO Matthew Prince in an interview with Protocol ahead of Cloudflare's announcement Tuesday morning. Cloudflare will not charge data-egress fees for customers using R2, taking direct aim at the fees AWS charges developers to move data out of its widely popular S3 storage service.

R2 will run across Cloudflare's global network, which is most known for providing anti-DDoS services to its customers by absorbing and dispersing the massive amounts of traffic that accompany denial-of-service attacks on websites. It will be compatible with S3's API, which makes it much easier to move applications already written with S3 in mind, and Cloudflare said that beyond the elimination of egress fees, the new service will be 10% cheaper to operate than S3.

"We are aiming to be the fourth major public cloud," Prince said. Cloudflare already offers a serverless compute service called Workers, and Prince thinks that adding a low-cost storage service will encourage more developers and companies to build applications around Cloudflare's services.

Joining the ranks of AWS, Microsoft and Google will be a difficult undertaking. It has been 15 years since AWS launched S3, which kick-started the cloud computing revolution and currently stores an enormous amount of web content on behalf of its customers. Couple that history with the dozens of compute and software-development services it currently offers, and it's not hard to see why AWS has more than 40% of the market for cloud infrastructure services, according to Gartner.

But Prince thinks cloud buyers are less enamored with AWS these days, and rarely passes up an opportunity to bash the company while promoting the services that Cloudflare offers, which generated $431 million in revenue last year. R2 strikes directly at one of the biggest sources of frustration with AWS: Getting your data out of its cloud network can be an expensive and frustrating undertaking.

No exit

AWS, Microsoft and Google charge their customers pennies per gigabyte of data that they transfer out of its storage service to the internet, and that can add up very quickly. In 2019, the Information reported that Apple was paying AWS around about $50 million in data-transfer fees a year, about 6.5% of the total amount it spent that year.

Major cloud providers built and maintained staggering amounts of networking equipment to handle customer traffic, and therefore feel entitled to recoup some of that investment, but Prince thinks they're charging too much. In 2018, Cloudflare launched the Bandwidth Alliance in hopes of encouraging cloud companies to link up their networks and reduce egress costs for mutual customers.

R2 puts that thinking into real practice. Cloudflare's R2 customers won't have to pay anything to move their data out of Cloudflare's network, Prince said.

"Customers shouldn't get locked in just because they can't afford to pull their data back out of the service," he said. Last year HPE CEO Antonio Neri compared the public cloud to the "Hotel California" in an interview with Protocol: As the Eagles might have put it, your data can check out any time it likes, but it can never leave.

At launch, R2 will cost $0.015 per gigabyte of data stored on the service, about half as much as AWS charges for customers on its frequent access tier. Infrequent access to R2 will be free, the company said.

R2 will be "accretive" for Cloudflare; the company is still planning to make a profit on the service despite the lack of egress fees and lower prices, Prince said. Cloudflare's network is already interconnected with roughly 25% of all the independent networks around the world — and with almost all of the major ones, including the big cloud providers — in order to provide its core services, which means it has much lower bandwidth costs than most operators, he said.

Table for four?

Prince acknowledged that R2 will not deliver the same amount of performance as S3 at launch, especially when it comes to writing data to its servers. The service also won't launch with as many add-ons such as analytics tools that are available with S3, although Cloudflare plans to offer those additional services over the next several months.

Reading data from R2 should be on par with the S3 experience, he said, and like S3, Cloudflare's service will offer strong consistency, which is important for customers that need to sync data quickly.

Current cloud-storage services require customers to select a region in which to host their data, but R2 will be able to replicate stored objects around the world for faster access, Prince said. However, it will also be able to support data-residency laws, which require certain types of data to be stored in distinct geographical locations.

Is all that really enough to vault Cloudflare into the upper ranks of cloud computing vendors? On their own, R2 and Workers probably aren't enough for every major enterprise's computing needs, but Prince will be happy if Cloudflare can attract even small amounts of business away from the big cloud companies.

"We really try to make it very easy for people to incrementally move more of whatever it is that they can use on Cloudflare's network to us," Prince said.

Updated 9/29: AWS issued a statement in response to the launch of R2: "We agree that Amazon S3 has been a game changer for developers. With the deepest feature set and industry-leading scalability, data availability, security, and performance, customers are storing well over 100 trillion objects there today. While we can't comment on a product that has been announced but not released, we welcome competition generally across our businesses because we believe it is healthy and helps grow markets."

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