The Company Store

On May 1, Google Cloud doubled the egress rates on three products: CDN Interconnect, Direct Peering, and Carrier Peering. The reason given was "significant investments in global infrastructure," and the rate increase applies automatically with no opt-out. If you serve objects from a Google Cloud Storage bucket through Cloudflare or Akamai or Fastly, your cost of getting your own bytes back out of Google's network just doubled in North America, and Google did not need you to agree to it.

I have been trying to find a contemporary parallel for what this is for about a week, and I keep landing in the same place. The parallel is coal scrip.

A few weeks ago, I wrote about the Pullman strike (and make some significant errors, pointed out by Tim Banks, please read up on it!) If you read American labor history at all you have at some point run into the company town. Pullman, Illinois is the famous one. Pullman is famous for the strike, not for the scrip, and it turns out the National Park Service will tell you politely that George Pullman did not actually pay in scrip. The real scrip towns were in the coal country of Kentucky, West Virginia, and Virginia, and roughly seventy-five percent of all the scrip ever issued in the United States was issued by coal operators in those three states. The mechanism was the same everywhere, wher a would miner get paid in chits that were only good at the company store. The company store sold flour and bacon and lamp oil at whatever price the company felt like setting that month. But if you tried to spend the chits anywhere else, you got fifty cents on the dollar at best, sometimes nothing. If you tried to leave town, you had to pay off whatever debt you had run up at the store first, and the store kept the books. The wages went up every year, but the cost of leaving went up faster.

The point of scrip was never the price of bacon. The point of scrip was the asymmetric power to set the price, and the impossibility of carrying the value of your labor across the town line without taking a haircut so deep that most people did not bother to try.

That is what cloud egress is.

The bytes themselves cost the cloud provider almost nothing to ship out. The marginal cost of pushing a gigabyte from a Google data center in Iowa to a customer's office in Sydney, in 2026, on amortized fibre that has been in the ground for fifteen years, is ALMOST to cheap to meter. The list price is, depending on the destination and the discount, somewhere between eight and twelve cents per gigabyte. The markup is not a revenue source; it is a fee for leaving which is not set by what it costs the provider, but what the customer can be made to swallow before the migration to another provider becomes worth the engineering pain. And as the pain bar moves up over time, the fee moves up to track it.

Google's May 1 increase is, on its face, a routine pricing action by a single cloud, on a single product line, with a stated rationale. The customer's CDN, Cloudflare or Akamai or Fastly, is the one billing the customer downstream, so the price increase shows up on a different invoice from the one the customer associates with Google. The customer feels the bill climb at the CDN, calls the CDN, gets told the increase came from Google's peering rates, calls Google, and gets told that the rates are public on the website. And, while both statements are true, the combined effect is that nobody is on the hook for the increase in any conversation the customer is allowed to have. The miner walks into the store, the price of flour has gone up, and the man behind the counter shrugs.

Coal scrip ended for a few reasons that are worth keeping in mind.

The mechanical reason was that paying workers in anything other than legal tender became illegal in most coal states between roughly 1909 and 1940. Federal labor law caught up with the scheme. The Norris–LaGuardia Act and later the Fair Labor Standards Act made the scrip economics impossible to enforce, and the scrip stores collapsed because the wages they depended on stopped being denominated in store credit. The legal substrate underneath the lock-in fell out.

The economic reason was that workers stopped accepting scrip jobs once enough mines were paying in dollars. The scrip mines tried to compensate by raising nominal wages, but a real-dollar miner with a real-dollar wage and a real grocery store across the road did not need a raise to be poached. The wage premium that scrip mines had to pay to keep workers eventually exceeded the rent the company store could capture, and the scheme stopped being profitable.

The cultural reason was that the population of the United States stopped being willing to accept the fiction that this was just how mining was done. Scrip looked normal in 1900 and crazy in 1940 because the country changed its mind about what counted as a wage.

I do not think the cloud version goes the same way for any of those three reasons in the same order. The legal substrate is a long way from arriving, because regulators do not have a clean precedent for compelled price floors on a service that the customer technically opted into. The competitive substrate is closer, because hyperscaler-to-hyperscaler migration is real, but the per-customer cost of executing it is still measured in years of engineering time, and the migration tools are written by the same vendors that benefit from migrations being hard. The cultural substrate is, I think, the one to watch. The cloud customer in 2026 is starting to talk about egress and lock-in the way a 1925 miner started to talk about the company store. Which is to say, with the particular kind of dawning irritation that comes from realizing the deal you signed last year is not the deal you are now in.

The European Commission is about to drop its Tech Sovereignty Package on May 27, with a Cloud and AI Development Act inside it that is, in essence, the legal substrate question asked back to the hyperscalers. Whether that particular bill survives the lobbying gauntlet between now and the autumn of 2027 I have no idea. The fact that it was written at all is a leading indicator. Once a sovereign starts drafting a statute that says "your customer should not have to pay you a tax to leave," the company-store window is closing whether or not that particular statute passes.

The architectural answer is not "stop using cloud," which is a strong and (usually) dumb position to take. The architectural answer is to refuse to put any system in a place where the cost of leaving compounds against you faster than the value of staying. START thinking about how to federate the workload across providers before you need to, or against your own physical infrastructure, or both. Then you can put the data where it is going to be read most often, and design the system so that the next migration is a routing-table change instead of a six-month engineering project. The boring word for this is portability. The slightly less boring word is sovereignty. The accurate word, if you have been paying attention to the coal towns, is carrying your own wages out of town.

The 1940 version of cloud egress is some combination of all three of the reasons coal scrip collapsed. We can argue about which one matters most. We cannot, I think, still argue with a straight face about whether the parallel applies. Google just doubled the price of leaving. Nobody got to vote.

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