Brussels to set up security, business networks in push for European cloud

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This article is part of our special report Digital Summit for Growth.

SPECIAL REPORT / The Commission is setting up new expert groups to advise on security and business related-issues to accelerate the establishment of a unique "European cloud" capable of challenging global rivals in a sector where the EU has been lagging behind.

Yesterday (28 October), the EU executive announced the formation of an expert group to work on safe and fair terms for cloud computing contracts, to identify best options for consumers and small companies, often reluctant to purchase cloud computing services because contracts are unclear.

The Expert Group is part of the Commission’s push to enhance trust in cloud computing services and unlock their potential for boosting economic productivity in Europe. The group will be drawn from academics, lawyers, and consumers and providers of cloud computing services.

It is one of the key actions under the Commission's Cloud Computing Strategy, which was adopted last year (IP/12/1025, MEMO/12/713) and is meant to tackle cloud-related issues.

"We are asking experts to provide a balanced set of contract terms for consumers and small and medium-sized enterprises to use cloud computing services with more confidence. Trust is bankable – citizens need to be able to trust that the services they use are fair and reliable," said vice president Viviane Reding, the EU’s justice commissioner, announcing the group’s establishment.

Expert group will convene in November

The first meeting is scheduled for 19-20 November 2013 and the group is expected to report back in spring 2014. The input will feed into a policy paper launching a broad public consultation on possible ways forward on cloud computing contracts for consumers and SMEs.

Meanwhile the "European Cloud Partnership" – which will meet in Berlin under the auspices of Neelie Kroes, the commissioner for the digital agenda, in two weeks’ time – will set about a more commercial strategy to unleash European cloud services.

The Partnership is a group of industry and public sector stakeholders with a steering board, chaired by Toomas Hendrik Ilves, the President of Estonia, which advises the Commission on options for converting cloud computing into economic growth opportunities.

The steering group is currently working on a strategy paper which will be discussed in Berlin, and will also consider new instructions to create a pan-European group of “digital co-ordinators” from each member state.

This was a specific request of heads of state and government at last week’s summit, which they spelled out in the conclusions: “The European Council calls for the establishment of a strong network of national digital coordinators which could play a strategic role in cloud, Big Data and Open Data development.”

Questions over "Fortress Europe" approach

However, the drivers to push for a specific “European cloud” are controversial, since they come on the back of a diminution of US cloud services, following the US espionage Prism scandal.

In June and July 2013, the Cloud Security Alliance, an industry group, surveyed members and other cloud computing stakeholders about their reactions to the US Prism spying scandal.

One in ten of non-US residents responding indicated that they had cancelled a project with a US-based cloud computing provider, in the wake of Prism; and 56% said that they would be less likely to use a US-based cloud computing service.

The Alliance predicted that US cloud computing providers might lose as much as €26 billion by 2016, equivalent to the loss of 20% of its share of cloud services in foreign markets.

“If European cloud customers cannot trust the United States government, then maybe they won't trust US cloud providers either," said Neelie Kroes, the EU's digital agenda Commissioner. "If I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now,” Kroes said in July.

Europeans hope to use the Prism scandal to win a share of this market, indeed this was one of the key issues on the agenda when Neelie Kroes met with the European Cloud Partnership last July in Estonia.

It is certainly true that US-based cloud service providers – including Google, Amazon and Microsoft – currently account for the lion’s share of cloud services, with around 85% of global markets.

Other foreign-based companies which are fast expanding into cloud services include China’s Huawei, whose chief executive for carrier networks, Ryan Ding, recently told EURACTIV: “Our future investment strategy is SoftCOM, based on cloud, and that will be the basis of future investments in our products.”

Picture is not so bleak as appears

There is some fear that Europe’s enthusiasm to build up a cloud capability may move in a protectionist direction, however.

John Higgins, the director General of DigitalEurope points out that the key to enabling cloud services is to keep open global models and markets, since cloud computing relies heavily on international data flows.

Higgins is more optimistic on Europe’s current cloud capabilities, saying that the economic benefits of cloud for companies and governments do not depend on who is providing the service.

There are also many European SMEs which are involved in cloud services, he says, in addition to larger players such as SAP, meaning that the picture of Europe being inundated by foreign suppliers is not quite accurate.

However, arguments about "fortress Europe” will persist, especially since cloud is connected heavily to a number of sensitive policy issues including data protection, copyright and environmental concerns surrounding energy expenditure required to cool large data centres.

Cloud policy will be a fine balance

Various clauses within the proposed data protection regulation would impact on the larger US companies, such as Google and Amazon, offering so-called “over-the-top” data services, and more significantly on the burgeoning cloud computing sector.

These are all sensitive issues in the context of the EU’s ongoing negotiations with the US for for the Transatlantic Trade and Investment Partnership (TTIP), where rivalry between the two trade blocs in the critical booming data sector threatens to spoil any deal.

Finding a balance between pushing for Europe’s own cloud capability, without appearing to freeze out rivals unfairly, will be a key challenge facing policymakers in the coming weeks.

Cloud computing describes a whole range of infrastructure, software, data or applications residing in the cloud – that is to say, off your own premises and accessed via the Internet.

A study carried out by the University of Milan, published in late 2010, estimated that cloud computing has the potential to create 1.5 million new jobs in Europe over the next five years. The sector's turnover worldwide in 2010 was estimated at around €26 million.

While businesses and governments wax lyrical about the benefits of cloud computing, EU regulators have been more wary, as further use of cloud systems would mean a large swathe of public and commercial data would migrate to servers possibly located outside national borders or even on other continents.

On 27 September 2012, the European Commission adopted a strategy for "Unleashing the potential of cloud computing in Europe" (IP/12/1025, MEMO/12/713), designed to increase the use of cloud computing.

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