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VPC peering will be lower latency than PrivateLink.
With VPC peering, packets are sent directly between the physical hosts where the instances are running.
With PrivateLink, packets go through a double-sided NAT operation and also through a NLB. While low latency, there is slightly more latency with PrivateLink.
PrivateLink allows you to connect two VPCs that have overlapping IP address ranges (see this blog post for more information about dealing with overlapping IP addresses) while VPC peering does not. PrivateLink has a cost associated with it; VPC peering does not. PrivateLink allows for connections to be established in only one direction; VPC peering is more general network connectivity where connections can be established in either direction but are still controlled by things like Security Groups.
For more about how traffic flows in a VPC watch this YouTube video.
Network Latency: Both VPC peering and PrivateLink operate within the AWS network infrastructure, which generally results in low latency. However, the actual latency may vary depending on the geographical distance between the VPCs and the AWS regions they are located in.
In summary, both VPC peering and PrivateLink offer low-latency connectivity options within the AWS network infrastructure. The choice between them depends on factors such as the specific use case, the services being accessed, data transfer requirements, and cost considerations. It's recommended to conduct performance testing and evaluate the specific requirements of your application to determine which option best suits your needs.
Reference :- https://pavolkutaj.medium.com/explaining-aws-privatelink-vs-aws-vpc-peering-f26c87e13d8f
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