When does it make sense to use a private link with Azure API Management (APIM)?

Recently, Microsoft announced the availability of Azure Private Link for APIM. It is still in preview as of 12/2022. Many folks were over-enthusiastic when reading this news, as they thought it was an alternative to the expensive premium tier, which integrates with virtual networks. Instead, using a private link with APIM allows you to privatize the consumption of your APIs but these APIs are not able to reach out to private resources, because APIM’s outbound traffic does not have access to the virtual network. The below diagram illustrates this:

Figure 1 – Using Azure Private Link with APIM

But then, what is the use case of using a private link with APIM?

Very often, B2B partners require you to provide them with a Virtual IP address (VIP) they can authorize on their end to allow you to access their internet-facing resources while restricting others. A typical way to respond to this requirement is to proxy partner APIs with your APIM. You might want to keep your proxy APIs private (isolated from the internet), while still using APIM as a proxy to the outside world, for a much more affordable cost than APIM premium.