Strategic Diversification: Why Optionality Has Business Value

The Business Model Behind "Free Tier"

Hyperscalers offer generous startup credits and free tiers. AWS gives $100K+ in credits to promising startups. Google Cloud offers $300K for some programs. This isn't charity—it's customer acquisition with sophisticated economics.

The model works because: once you've built on proprietary services (Lambda, DynamoDB, Cloud Functions), switching costs create retention. The credits get you started. Lock-in keeps you paying.

I've seen this play out repeatedly: a startup uses $100K in AWS credits, builds on Lambda and DynamoDB for velocity, then finds themselves locked in when credits end. The monthly bill comes as a shock—€5K, €10K, €20K per month—but migration would cost more than staying.

There's nothing wrong with understanding this model. Problems arise when you don't factor it into your planning.

What Diversification Actually Looks Like

I'm not suggesting you migrate everything to European providers tomorrow. That's not practical, and for many workloads it might not make sense. What I am suggesting is strategic diversification.

The 20% experiment:

Pick workloads that could run elsewhere without significant friction. Development environments, internal tools, or new projects are good candidates. Run them on a European provider—OVHcloud, Scaleway, or Hetzner. Learn what works and what doesn't.

What you gain:

• Your team builds multi-cloud expertise (skills that transfer across providers)
• Your architecture becomes more portable (you'll find and fix hidden dependencies)
• Your negotiating position improves (you can credibly discuss alternatives)
• You have a tested fallback if you ever need one (proved, not theoretical)

The cost: Some additional operational complexity (managing multiple providers). Some learning curve (different APIs, consoles, quirks). Usually worth it for the strategic value gained.

The Honest Pricing Story

Let's talk realistically about cost. Because if the business case requires claiming "European providers are 50% cheaper," we're on shaky ground.

The truth: European providers are competitively priced, not cheaper.

After year-one credits expire and you compare apples-to-apples (similar instance types, equivalent storage, comparable services), costs are roughly similar. Sometimes European providers are slightly cheaper, sometimes slightly more expensive, usually within 10-20% depending on workload mix and region.

What creates the "cheaper" perception:

Egress costs: AWS charges €0.09/GB for data transfer out. Scaleway charges €0.01/GB (plus 75GB free monthly). For egress-heavy workloads, this is significantly cheaper. But for compute-heavy workloads with minimal egress, the difference is small.

Proprietary service premium: Lambda, DynamoDB, SQS—these services are convenient and charge premium margins. Equivalent functionality on standard infrastructure (Kubernetes, PostgreSQL, RabbitMQ) often costs 30-50% less. But it requires more operational expertise.

Contract leverage after year one: This is the hidden cost. When credits expire and you're locked into proprietary services, renewal negotiations favor the vendor. I've seen increases of 20-40% at renewal for organizations that couldn't credibly threaten to migrate.

The Optionality Value

Some value doesn't appear in cost comparison spreadsheets.

Scenario: Contract renewal with AWS

Current spend: €10K/month. Credits expired. Fully built on AWS-specific services (Lambda, DynamoDB, CloudFormation, proprietary APIs everywhere).

Without alternatives:

• Weak negotiating position (vendor knows switching would be extremely costly)
• Renewal pricing: €12-13K/month (+20-30% increase)
• You accept because migration would cost €100K+ in engineering time
• This repeats every renewal

With maintained portability:

• Strong negotiating position (built on Kubernetes, standard APIs, could migrate to Scaleway/OVHcloud)
• Renewal discussion: "We're evaluating European alternatives"
• This is credible, not bluff (you've maintained portable architecture)
• Renewal pricing: €10K/month (flat) or minimal increase
• Avoided €2-3K/month × 12 months × years = substantial savings

ROI of portability:

The small architectural overhead of maintaining portability:

• Use Kubernetes instead of ECS/proprietary orchestration
• Use PostgreSQL instead of DynamoDB
• Use standard APIs instead of vendor-specific
• Avoid deep integration with proprietary services

This overhead pays for itself through negotiating leverage. The vendor knows you can leave. This changes pricing conversations.

What We Actually Tell Leadership

"European cloud providers are competitively priced. We're not promising 50% cost savings—that's overselling. What we're offering:

1. Comparable pricing (within 10-20% depending on workload, often cheaper for egress-heavy applications)
2. European jurisdiction (data subject to European law, simpler GDPR compliance)
3. Negotiating leverage (credible alternatives prevent vendor lock-in pricing at renewal)
4. Strategic independence (control our infrastructure stack, respond quickly to security issues)
5. Innovation investment in Europe (revenues to European companies, not US parents)

The value proposition isn't primarily cost. It's strategic. We pay roughly the same but gain independence, optionality, and sovereignty."

Making Infrastructure Choices Visible

Every infrastructure decision has implications beyond the spec sheet. The question isn't whether to think about them—it's whether to think about them consciously or by default.

When choosing providers, consider:

• Where is the provider incorporated? What laws apply to your data?
• Where do profits flow? European company or subsidiary of US parent?
• What's the energy source? Actual renewable, nuclear, or fossil fuel?
• What's the long-term relationship? Partnership or lock-in?

These aren't abstract concerns. They affect compliance, costs, sovereignty, and your options down the road.

Sources:

• Scaleway vs AWS Comparison
• Scaleway Pricing
• AWS S3 Pricing

#cloudstrategy #diversification #multicloud #businesscase #cloudsofeurope