The European Commission released yesterday (27 September) its EU strategy on cloud computing, which promotes off-site data storage in a bid to create new jobs and raise €160 billion per year in information technology savings.

Neelie Kroes, commissioner for the digital agenda, said the strategy would translate into savings of around €300 per person each year. Once the strategy is fully underway, the EU executive said it expected gains of some €600 billion between 2015 and 2020 overall.

The commissioner also sees cloud services as a driver for economic growth, saying it could generate 2.5 million new jobs, depending on how efficiently the strategy is taken up.

Smaller businesses stood to benefit the most, with forecasted savings of some 10-20% in ICT, due to the cheaper running costs of cloud.

By participating in an EU-wide strategy, member states would also benefit from a “competitive advantage” on the world scene, due to the size of the European market and the trust created by a common approach, Kroes further argued.

Cloud services could even help tackle illegal downloading, added Kroes’ spokesperson Ryan Heath, saying it "allows almost perfect tracking of who buys, downloads what” on the internet.

European approach

In cloud computing systems data, including copyrightable files such as music, can be transferred to servers outside national borders, raising concerns about applicable law.

One of the chief stumbling blocks towards cloud benefits was if services were “only done at member state level”, said Carl-Christian Buhr, a Commission technical expert. A cross border approach, the Commission said, would be unworkable if there were 27 different rule sets.

Companies in Germany for example had regulations preventing them from making use of the cloud, Buhr claimed, since rules there stipulate the need to control their IT physical infrastructure.

Kroes echoed that, saying that “with national rules we are lost”, adding the EU executive was taking steps to persuade companies to make use of the cloud and to increase consumer confidence.

The Commission attempted to allay user worry that their data may not be as safe if it is stored in another country, by suggesting that they could make sure their cloud computing contracts specified its physical location.

The EU’s proposed Data Protection Directive, currently doing the rounds in Parliament, requires information to be stored either in the European Economic Area or in a country with equivalent privacy laws, but does not have any clauses written specifically to address cloud issues.

Cloud copyright levies storm

Cloud computing creates a crucial problem: since there is no limit to memory capacity, consumers can create an almost unlimited number of copies of media. Therefore levies cannot easily be applied.

The Commission communication admits that "questions arise on the possible collection of private copy levies for any private copying of content to, from or within the cloud."

Copyright levies administered by collecting societies are imposed on music and content downloads onto devices with memory, such as memory sticks, mobile phones and laptops. The EU executive said it was “in favour” of these tariffs as they had helped buffer artists from the growing prevalence of illegal downloads.

Powerful European collecting societies have resisted a multi-territorial approach since they currently benefit from holding licensing rights in individual countries. 

As a result the EU paper appears to shelve discussions on the future role of collecting societies, pending the results of a 'mediation process'. The Directorate General for the Single Market launched this process "with a view to harmonising the methodology used to impose levies".

“The collecting societies want copyright to apply in the cloud the way it does elsewhere,” said Kostas Rossoglou, senior legal advisor at the European consumer organisation BEUC.

However, Kroes's Digital Agenda directorate see cloud as an opportunity to boost a single market in copyright.

A draft of the communication said the uptake of multi-territorial licenses by commercial users was “proving difficult, cumbersome and costly”.

Coherent standards

The EU executive said it will work with the WTO and OECD to establish common international objectives for off-site data storage.

As a result the EU will continue to include cloud computing issues in free trade negotiations, such as with India and Singapore.

Among the issues to be raised in international discussions is data protection, liability of intermediaries, standards and operability requirements, and application of tax law to cloud services.

Environmental debate

All the data that is created online in web-based services, such as Hotmail and Gmail, has to be saved somewhere.

In contrast with the fanfare for off-site data storage in Brussels, the New York Times claimed this week that the reality of these data centres was "sharply at odds with its image of sleek efficiency and environmental friendliness".

"Most data centers, by design, consume vast amounts of energy in an incongruously wasteful manner, interviews and documents show," the US daily said.

The report went on to claim that data centres can waste up to 90% or more of the electricity they pull off the grid.

These storage sites consume between 1.1 and 1.5% of global energy use, with Google data centres alone accounting for 0.01%. By comparison, Transport accounts for some 25%.

Heath told EurActiv: "It's fundamentally true that data centres are unsustainable if they don't change".