In Response to Google, Amazon Drops EC2 And RDS Prices by 40%, S3 Storage Costs By 36% To 65%
Amazon today announced a new round of price cuts for a number of services on its cloud platform, including its S3 storage service, EC2 cloud computing platform, ElastiCache …
Context & Ripple Effects
This is AWS answering a direct challenge within 24 hours. On March 25, Google announced sweeping price cuts across its cloud compute and storage services plus sustained-use discounts (Google's massive cloud price drops), and Amazon responded the next day with cuts of its own across EC2, RDS, ElastiCache and S3 — 40% on EC2/RDS and 36–65% on S3 storage, per the confirmed announcements.
The cadence is the story. This is the second AWS price reduction in barely two months — January brought an S3 cut of up to 22% alongside EBS reductions of up to 50% — and it extends a repricing habit stretching back at least to AWS's June 2011 price drop. Eight outlets picked up the March announcement, from Gigaom to The Register, signaling that cloud pricing is now treated as headline news rather than routine vendor housekeeping.
First-order effects
- Existing AWS customers see immediate bill relief: EC2 and RDS costs fall 40% and S3 storage 36–65%, lowering the cost of running workloads that were priced at January's rates just weeks ago.
- Google's sustained-use discount model forced Amazon into a same-day competitive posture — AWS is no longer setting the price of cloud infrastructure unilaterally but matching a rival's move.
Second-order effects
- Other cloud providers — Microsoft among them, given Gigaom framed the original Google move as a challenge to both — face pressure to follow with comparable cuts or justify a premium for their platforms.
- Cheaper compute and storage lowers the barrier for startups and enterprises to shift more workloads onto public cloud rather than owned hardware, accelerating volume growth that funds further price cuts.
Third-order effects
- If the tit-for-tat pattern holds, cloud infrastructure pricing becomes a recurring public auction between Amazon and Google, with margins on commodity compute and storage trending toward thinness while differentiation shifts to higher-value services layered on top.
- Repeated steep cuts normalize the expectation that cloud prices only fall, which reshapes enterprise procurement — buyers gain leverage to demand annual repricing rather than locking multi-year contracts at fixed rates.
The trend: Cloud computing is entering a price-war phase in which Amazon and Google publicly undercut each other's compute and storage rates within days, turning infrastructure pricing into a competitive spectacle.