Google App Engine is a classic bait-and-switch scam

May 11, 2011

Back in October 2009 I was roaming the web, reading everything I could on cloud computing. I was in the middle of development of Repel for DotA-GC and it needed a web service component. The $9/month HostGator shared hosting plan DotA-GC had at the time wasn't going to cut it. One option was to get a regular dedicated server, but even the cheap HostGator dedicated servers were around $200/month. Not exactly a bargain, especially when compared to the $1/month AdSense revenue that the DotA-GC website was pulling in.

Cloud computing was just starting to gain some real buzzword status and I like cutting edge technology so I looked into it.

The first offering I looked at was Amazon EC2. To me it looked like it's just an expensive way to buy dedicated servers. There wasn't really much added value there and now I can put a fancy word on that - EC2 is infrastructre as a service (IaaS). I was more interested in platform as a service (PaaS), so I looked further.

I found salesforce, but I didn't really understand what they were offering. Actually, to this very day I'm not qutie sure. This most likely means that whatever they offer isn't even related to my needs.

Then I found Microsoft Azure. C#? SQL? I was hooked! Most of the DotA-GC system was built with C# and MSSQL at the time, so it seemed like the perfect match. I looked around, watched some videos, read some articles - everything looked great, including the pricing. That is, until I found a thread on the Azure forums that explained something that wasn't even mentioned with an asterisk on the official pricing page. The minimum monthly price would be quite high (ca $100/month) because an instance would need to be running 24/7. This wasn't really on-demand scaling like they were advertising so yet again I had stumbled upon a service that is more like a dedicated server than some magic cloud scale.

I was starting to wonder what the hell all this cloud computing buzz is about? However I didn't give up just yet and looked around some more and then it happened. I discovered a really obscure cloud computing service, offered by Google of all companies - Google App Engine (GAE). GAE didn't have a minimum monthly price, in fact it had a really nice free daily quota (6.5 CPU hours, 1GB storage, 1GB bandwidth). More importantly though, there was no need to pay for idle time as the instances were fired up on-demand automatically by the system and I would be charged only for actual usage. I did some calculations and basically I concluded that I can run my service for free on GAE, while on Azure and the like it would cost me $100/month. If my application usage would grow then the costs would be similar to other offerings, but until then I wouldn't have to worry too much about income streams.

What about downsides? I would have to learn to design systems that fit the GAE philosophy and also learn a new language, either Python or Java. Because I had a lot of experience with C++ and C# and porting old code would be easier to Java, I chose Java. I would have to lock myself into GAE and in return I would get a lot of nice features and a startup friendly pricing plan. Plus it was Google, and Google is awesome right?

That's what I thought and everything was going relatively well for 18 months straight. In September 2010 I even started building a totally new web based system for DotA-GC on top of GAE. Unfortunately all good things come to an end and on May 10th 2011 during Google I/O the new pricing plans for GAE were announced and I quote: "In order to become an official Google product we must restructure our pricing model to obtain sustainable revenue.". Now I could maybe even accept a 2x or 3x price increase because the service is quite awesome, but this is not the case.

Lets calculate the current DotA-GC web server costs with the new pricing and compare it to the old one. (Raw numbers for May 10, 2011)
Currently everything fits inside the free daily quota, except blobstore storage for which I have to pay $0.02/day, or $0.60/month.
With the new pricing the breakdown would be:

$09.00 flat fee per month
$04.80 2 extra instance hours per day for a month
$23.10 datastore operations
$02.10 channels opened

$39/month is 65 times more expensive than $0.60/month. Sixty-five times more expensive. This is ridiculous. The increase will be even higher for Python applications, because every additional active instance is now charged for ($0.08/h or $57.60/month). All my GAE applications are written in Java and so my blow is somewhat softened by multi-threading the requests into the initial free instance.

They completely removed the old CPU usage based pricing and added a bunch of pricing meters that I haven't optimized for. A lot of my CPU usage optimization investments effectively down the drain. This really makes me all warm and fuzzy inside. To be fair, I could probably cut the new price in half with a lot of new clever optimizations. However this will require quite a bit of investment from my part that I otherwise wouldn't have had to do. Not to mention, even the halved price of $19.50/month isn't that great as it's still a 33x increase over the old one. I could get much more capacity out of $20/month if I would go with an alternative service, and there are a truckload of new competitors in this space now.

It could be argued that the additional value of GAE (it's a PaaS, not an IaaS after all) is worth the high price. This may be true and maybe I could even trick myself into paying this higher price if my application would have the revenue to pay for it. However it does not and this brings out the most crucial change in the new pricing plan in my opinion. It is a merger of the GAE for Business pricing and the old regular pricing, and the result is biased heavily towards enterprise. GAE is no longer startup friendly, not ramen noodles startup friendly anyway. The new free quoatas are a small fraction of what they used to be and the initial step to a payed plan is a steep one. Perhaps not as steep as Azure, but steep nevertheless.

This whole situation feels like Google designed the original preview prices to attract a lot of startups and single developers who are willing to take the risk of an untested platform. Now that GAE is throughly tested and fairly stable with the high replication datastore, they changed the prices to match enterprise budgets and the no longer necessary testers need to cough up the dough or fuck off.

It has been almost 24 hours since I first learned of these price changes and I haven't really thought about anything else all this time. This really shakes up my situation. I either need to quickly find additional income streams for my applications, shut them down or take on the suicidal task of redesigning the systems for alternative platforms. Those choices all kind of suck, so to end on a brighter note I can say that I learned a valuable lesson. I should always minimize dependencies on specific external services and products as much as possible.

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