I’m blogging this because I’ve only just noticed it; I’m not sure when it was announced. From 25th May, Google is reducing the resource quotas allowed for App Engine applications, before you have start paying. The question “by how much” is tough to answer, because the quota system is complex. Here’s the relevant document; there are quotas for bandwidth in and out, internal API calls, CPU time, data sent and received from the internal datastore, emails sent, and use of the image and caching services.

Still, what caught my eye is this:

The new free quota levels to take effect on May 25th will be as follows:

• CPU Time: 6.5 hours of CPU time per day
• Bandwidth: 1 gigabyte of data transferred in and out of the application per day
• Stored Data & Email Recipients: unchanged

Currently, you are allowed 10 gigabytes in and 10 gigabytes out per day. So it looks to me as if by some measures the quotas have been reduced to one tenth of what they were; unless the new limit aggregates incoming and outgoing transfer, in which case it would be one twentieth.

The spin is that:

We believe these new levels will continue to serve a reasonably efficient application around 5 million page views per month, completely free.

It’s true that the old limits are generous. Still, the real point here is not to build your business on “free” services; at any moment the terms can change, sometimes severely. While the same is true of paid-for services, it is more difficult to make extreme changes.

It is also a reminder of Google’s usual tactic, to buy market share with generous initial terms. Remember all those Google Checkout incentives when the company was fighting to win customers from PayPal?

I’m actually more comfortable with Amazon’s approach to web services: nothing free, but commodity pricing from the get-go.