American Cloud Providers Need Bigger European Infrastructure

Pablo Valerio, International Business & IT Consultant | 8/28/2013 | 29 comments

Pablo Valerio
A few weeks ago, Neelie Kroes, vice president of the European Union for the Digital Agenda, warned that American cloud companies could lose $35 billion because of the NSA spying scandal under the Foreign Intelligence Surveillance Act (FISA):

If European cloud customers cannot trust the United States government or their assurances, then maybe they won't trust US cloud providers either. That is my guess. And if I am right then there are multi-billion euro consequences for American companies.

Later, it was discovered that the NSA has placed servers in Europe to track online communications and Internet browsing of Europeans, with their XKeyscore spying software. Simultaneously the European Commissioner for Competition, Joaquin Almunia, has been asking companies such as Google, Facebook, and Amazon to respect EU's antitrust legislation and privacy laws.

There are significant indications that American cloud providers have been losing European customers for some time. Many of those companies are seeing their customers in Europe move away from their services and choose telecoms and other cloud companies that provide better service, and do not answer to US agencies looking for their customer's data.

But there is a way for American cloud companies such as Google and Amazon to regain some of those customers and new ones in Europe: Invest in European infrastructure and establish partnerships with local players. Due to the secrecy of American intelligence requests for data, backed by secret FISA courts, no company with foreign (non-US citizen) ownership could be subpoenaed to deliver their customer's data, except by local courts. To obtain such information from European servers, any law enforcement agency would need to work through local courts and obtain the necessary warrants.

Both Google and Amazon already have some servers in Europe, but not enough to cover the needs of all their European customers, and significant amounts of data are replicated in servers in other regions. For instance, although Google operates datacenters in several countries, Amazon has concentrated almost all their European infrastructure in Ireland, making it vulnerable to massive attacks.

My choices for the location of additional servers are Switzerland and Luxembourg. Both countries are members of the European Economic Area, are centrally located, have low corporate taxes, and have strong secrecy legislation. Additionally, they are strongly opposed to collaborate with foreign intelligence services.

Expanding their European infrastructure can help cloud providers with the concerns expressed by several European countries about the way they use several legal schemes to avoid paying European taxes.

The European Commission wants companies to embrace cloud computing and create a true European market for those services. If the American cloud providers want to participate in this potential business, they need to focus on optimizing and expanding their offerings in the old continent.

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Tuscany   American Cloud Providers Need Bigger European Infrastructure   11/18/2013 2:02:05 AM
Re: Data Centers: Time Consuming and Costly ?

@shedzadi    Great point, it is really difficult to manage a multi-national undertaking.  I would think there are very few who can actually do it.   Google tends to give the impression that it would be best at doing this from a tech perspective, which is why I am surprised to learn of their shortcomings in this area.

shehzadi   American Cloud Providers Need Bigger European Infrastructure   11/18/2013 1:54:28 AM
Re: Data Centers: Time Consuming and Costly ?
@tuscany managing an offshoot of your company outside you virtual control is really difficult. Your reputation is at stake. I believe its just like you loosing control of your own data and giving it in the hands of otthers.
shehzadi   American Cloud Providers Need Bigger European Infrastructure   11/18/2013 1:51:53 AM
Re: Good for Europe
@cs83083 opening a data centre requires extensive research and cost. Till the time companys do not carry out study, they will not develop any site. Moreover they need to have ROI ensure fr their effecient running. I think companys need to be sure about the project and only then they can go ahead with the project.
Tuscany   American Cloud Providers Need Bigger European Infrastructure   11/17/2013 10:51:07 PM
Data Centers: Time Consuming and Costly ?

Thanks Pablo for this eye-opening account of how major vendors Amazon and Google are handling their business abroad.  Just brings to mind how complicated and expensive it must be to extend reach.   Or is there more to it ? 

cs83083   American Cloud Providers Need Bigger European Infrastructure   9/1/2013 6:10:16 PM
Re: Good for Europe
Who's going to give me a loan to build a Cloud DataCenter in IceLand? All investors want to build in SF, NYC or some centralized US location. This would be a great oppertunity to open up some new markets, but I have yet to find any investors who want to move the Cloud closer to Europe.
kicheko   American Cloud Providers Need Bigger European Infrastructure   8/31/2013 8:16:07 AM
Re: American Cloud Providers Need Bigger European Infrastructure
David, - Is it so that most clients of American cloud providers are themselves American or otherwise exist within the same country? I'm curious because i imagine that is the only way the risk of losing EU business can be written off.
shakeeb   American Cloud Providers Need Bigger European Infrastructure   8/31/2013 4:54:41 AM
Re: finding other cloud providers
@geeky – These servers need to be both virtually and physically protected to ensure data is safe. The cloud service provider needs to ensure they don't break the trust of the customer. 
shakeeb   American Cloud Providers Need Bigger European Infrastructure   8/31/2013 4:53:01 AM
Re: finding other cloud providers
@DonK – Starting earlier means there is chance to change how customer thinks. But the question still remains the same. As they say it's better late than never.  
shakeeb   American Cloud Providers Need Bigger European Infrastructure   8/31/2013 4:49:49 AM
Re: finding other cloud providers
@Sara – it's all about customer's trust, if you could convince the customer that your data is safe in your hand that's it. Can any cloud provider give this assurance to the customer?
shakeeb   American Cloud Providers Need Bigger European Infrastructure   8/31/2013 4:47:43 AM
Re: finding other cloud providers
@Pedro – I am still wondering why the government wants to have acts to disturb the cloud industry at US. After all this is one of the most expanding technologies across the globe. 
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