EU Data Privacy Laws Help European Firms Capture Cloud

Pablo Valerio, International Business & IT Consultant | 12/27/2012 | 10 comments

Pablo Valerio
I've written several times about how the US Patriot Act can make it difficult for American cloud services vendors to sell their services in the European Union. Some of them have been trying to circumvent the issue by installing new datacenters in the EU, but the fact is, most EU corporations not only want their data within the Union, but within their own country -- and possibly the same city. Also, government agencies can’t store any data with foreign suppliers.

Last week, I had the opportunity to talk with Jason Currill, CEO of Ospero Ltd, a leading European cloud and hosting provider headquartered in the UK. Ospero has datacenters in 23 countries, 16 of which are EU countries. Mr. Curril told me his company has benefited by offering the security and privacy required by the new EU regulations where the big names of the cloud (Google, Microsoft, and Amazon) are not able to comply.

As we've already discussed in many other posts, US cloud providers have enough problems trying to sell services abroad -- and domestically -- thanks to the Patriot Act. But now, some European corporations are stealing business from their American competitors by claiming that they can offer protection against government snooping.

European privacy laws are tougher than the US counterparts, but storing data on an EU cloud provider does not guarantee secrecy against government requests. While the Patriot Act is constantly invoked to express the belief that US spies have greater access to personal data in the cloud than in other countries (and that "local clouds" are the solution), the laws of Australia, Canada, Denmark, France, Germany, Ireland, Japan, Spain, and the United Kingdom also allow government agencies access to cloud data -- albeit with more judicial control.

The recent Google Transparency Report indicates that the US government's appetite for private data jumped 37 percent last year, mostly from police and government positions without judicial control. While the reasons for those requests are not disputed, the trend is uncomfortable for Europeans, who, as reported by many studies, value their privacy more than their American counterparts.

Even though European firms are happy to continue claiming more security, the real question is compliance. Most European countries insist that sensitive data is stored within their borders, not just in the EU. And that’s where most American corporations fail to comply.

Mr. Currill said his company is able to work with many public administration entities in several countries because they offer local cloud services and hosting. “Amazon and others thought that installing their servers in one EU country (Ireland) was enough. They are wrong,” he claims.

EU Commissioner Vice-President Viviane Reding had to cry foul late last year when she saw the advertising of an EU Cloud Computing service suggesting that its geographic location would protect data from the reaches of the US Patriot Act. But most European corporations today don't want to risk compliance issues and are happy to have their data locally, even if that means, as one writer puts it, "the fuzzy Internet cloud becomes a series of neatly divided gas bubbles."

Neelie Kroes, Vice-President of the European Commission and leader of the commission's Digital Agenda, wrote in a recent blog post:

Given the boost this brings, by 2020, the cloud could be worth a significant proportion of our economy -- equivalent to a few hundred euros per citizen. But only if we get the framework policies right.

I think you shouldn’t have to have a law degree to use these services with confidence; nor face protracted and expensive contract negotiations each time. And you should be able to easily change providers if you find a better offer.

I’m determined that we find a European solution to this: for maximum economies of scale. National rules would constrain clouds to national borders, with all the frustration that involves when you and take your data or services across a border. My ambition goes beyond that.

In September, the European Commission launched its plan to find that new "European solution" Kroes spoke of.

What are your predictions? Will the impact of conflicting international privacy and security regulations injure American cloud services vendors? Will that impact change your own organization's cloud decisions? Let us know in the comments below.

View Comments: Newest First | Oldest First | Threaded View
batye   EU Data Privacy Laws Help European Firms Capture Cloud   1/2/2013 1:03:36 AM
Re: Hooray for Europe
interesting point Rich... but it only valid for Western part of Europe... not Eastern Europe where free for all apply....
CMTucker   EU Data Privacy Laws Help European Firms Capture Cloud   12/30/2012 5:04:19 PM
Is it just me...
...or does anyone else sick of seeing the disclaimers about EU data policy on websites already?

Not to be too off topic...
Pablo Valerio   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 11:25:42 AM
Re: Privacy laws is tough
@geeky, Actually they do! not to the full extend, but it is a move to the right direction.

Many marketing companies, especially in the UK, are complaning about them, and that is an indication that they can't continue to track consumers the same way they did before. 

Also most European websites start with a warning about "cookies"; Facebook, Google and Microsoft have been fined and warned by the EU Commission about their practices.

I can give you many more examples, and the "Right to be Forgotten" is ready to come as a new regulation.

But there is no doubt that Marketers and Spooks are steping up their digital arsenal to continue spying on us. We need to be more careful than ever leaving digital footprints.
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Hospice_Houngbo   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 6:51:03 AM
Re: Conflicting regulations

"But, for the time being, I don't see any corporations storing critical data in public clouds, especially the ones from American providers."

 That makes sense. Sentitive data are better kept in-house. But cloud business will still flourish as most of the data is not critical.
geeky   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 6:50:02 AM
Re: Privacy laws is tough
Does these privacy laws really work ? I have some serious doubts since there were many privacy breaches during the past and dont you think all of them had a thing called Terms and Conditions and Privacy Policy ? So whats the difference ?
Pablo Valerio   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 5:24:31 AM
Re: Privacy laws is tough
@singlemud, I don't have any problem with law enforcement agencies accessing data as part of a criminal or terrorist inquiry, but ONLY with Judicial control.

At least, law enforcement agencies should be forced to inform a judge inmediately about any data request, and the judge should be authorizing any further request on the same case.

But that is not the way some governments want access to data. Why? Because judges ask questions!
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Pablo Valerio   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 5:20:31 AM
Re: Hooray for Europe
Rich, one big difference between American and European regulators is the way they deal with compliance.

The EU applies a somewhat different standard then United Staes does. In America, dominant companies are given great leeway. In Europe the law prohibits the abuse of a dominant position. The EU rationale is that shielding competitors preserves competition and enhances consumer trust in the long run.
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Pablo Valerio   EU Data Privacy Laws Help European Firms Capture Cloud   12/28/2012 5:16:33 AM
Re: Conflicting regulations
Susan, As Vice-President Kroes said, the EU needs to find an European Solution for the cloud. When that happens cloud services will be more efficient, cheaper and transparent to the user and European corporations.

But, for the time being, I don't see any corporations storing critical data in public clouds, especially the ones from American providers.
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Susan Nunziata   EU Data Privacy Laws Help European Firms Capture Cloud   12/27/2012 11:54:30 PM
Conflicting regulations
The conflicting laws and regulations will definitely prove challenging for cloud providers and for enterprises -- especially big multinationals. In the U.S. there are even conflicting rules on a state-by-state level regarding how data is transmitted and stored. These issues will not be resolved easily or quickly. It will fall to the enterprise to make sure that cloud providers deliver the compliant services they promise. Due diligence is key.
singlemud   EU Data Privacy Laws Help European Firms Capture Cloud   12/27/2012 10:23:52 PM
Privacy laws is tough
EU privacy law definitively hurt US cloud provider. Even we put the data center to EU. The US govement can still have access to it if needed, because of the patriot law for US companies. It has the same effect as the anti-bribery law.

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