VPC is GCP's network encapsulation with its own address space and set of resources. For instances from one VPC to communicate with an instance in another VPC, they can route traffic via the open internet. However, to communicate between privately two VPCs, GCP offers a service called VPC peering. We can create a peering connection without any project or organizational restrictions. VPC peering reduces network latency, improves security and network costs by communicating via internal IPs.