Unity or division in Europe’s cloud computing market?

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

This article is part of our special report ICT: Fuelling the economy.

The advent of cloud computing technology gives the opportunity to further strengthen the EU single market, but to capture its potential countries' laws must be sufficiently harmonised to let data flow easily across borders, writes Robert Holleyman, president and chief executive of the Business Software Alliance.

"Casting his gaze over what is now Western Europe, Julius Caesar famously observed, “All Gaul is divided into three parts,” which “differ from each other in language, customs and laws.” He took advantage of those tribal differences to conquer the region.

Today, Europe retains its differences in language, customs and laws. Yet it is strategically and economically unified in a way few could have imagined even 50 years ago. Together, the 27 nations of the European Union make up a single market that is the world’s largest economy.

European policymakers now have an opportunity to further strengthen that economic partnership for the digital age. The advent of cloud computing technology makes a tight union more logical and advantageous than ever before. The cloud allows a company to build its physical headquarters in one country, get the technology it needs to run its operations from a service provider that may be located in another, and cater to customers all around the world.

But to capture those efficiencies of scale, countries’ laws must be sufficiently harmonised to let data flow easily across borders. It is important for countries to reject trade preferences or regulations that would limit the exchange of digital services, block data at borders, or distort markets.

Policies that effectively chop the international cloud into small pieces would bring huge opportunity costs. The analysts at IDC predict the European cloud services market will reach €15 billion in the next three years. And that only counts direct sales of public cloud services. It doesn’t include private cloud solutions, which may be another 10% or 20% of the market. Nor does it include the knock-on benefits that come with accelerating digital commerce and making robust technology solutions available to more users with greater cost efficiencies than ever before. If countries throw up policy walls that hold data within their borders, they will be limiting their horizons and hampering potential growth.

The European Commission is shaping a formal strategy to promote cloud computing. To succeed, it must meaningfully stitch together a coherent approach to a wide range of cloud-related issues, from interoperability to infrastructure.

The Commission also is engaged in a laudable effort to harmonise laws that protect citizens’ personal information throughout the EU. Done well, this will create a more cohesive single market by eliminating unnecessary confusion among service providers and users. But the regulation needs to protect people’s privacy rights in a way that also ensures they have access to the full complement of services the internet has to offer. The current iteration of the Commission’s proposal is too prescriptive in mandating how information can be collected, stored, and managed, rather than focusing on the substantive outcomes that matter most to citizens. Depending on how the regulation is finalised, it could end up as a drag on digital commerce. That is not good policy for the cloud age.

Separately, some European governments, determined not to fall behind the United States in the cloud market, are adopting preferences to favour local providers. France, for example, recently set up a venture with France Telecom SA and the electronics company Thales SA to offer cloud computing services that are “made in France.” Germany, meanwhile, is considering rules that would dictate where servers must be located if they hold confidential or sensitive data.

The Business Software Alliance will soon release a study ranking 24 countries on how conducive their laws and regulations are for cloud computing. The study covers six European countries and finds all of them to be in strong competitive positions. But none should take for granted their strength. Adopting anti-competitive policies that would divide up the inherently global cloud market would be a sure way to lose ground."

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