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January 25, 2011

Drawing Around Cloud’s Geographical Borders

Nicole Hemsoth

One of the great unsettled issues around cloud standards arises when particular countries or vendors look to a viable market only to find that there are no options due to standards protecting the geographical integrity of data storage.

To work around this, some larger vendors are expanding their presence elsewhere in the world while other nations are seeing limited offerings (and higher prices) if an outside vendor has not set up shop in their country.

With fresh projections about the dramatic growth of the European cloud market, cloud providers are cropping up in the UK and elsewhere on the continent from outside of the EU.

Companies like Rackspace, for instance, are seeing the value in building datacenters on the continent in order to reach customers that would be off-limits due to stringent regulatory practices that requires European data to stay within the confines of its home territory.

In the EU “Companies cannot just put any data they like in the cloud if the company that hosts it might store it on servers outside the EU—or more accurately—European Economic Area territory.” There is a law in effect, known as the Eighth Principle of Data protection that prohibits data transfer outside the EEA unless the country it is going to “ensures an adequate level of protection for the rights and freedoms of data subjects.”

While companies that adhere to “safe harbor” rules in the United States are fair game for European companies to make use of, these requirements are often not met by other countries.

As Stephen Pritchard from IT Pro stated, for countries like India, for example, “the presumption is that data storage is non-compliant, unless the business itself—the data controller—takes substantial steps to protect it. While this is achievable in a wholly owned datacenter, it is scarcely practical in the cloud, where the business model rests on offering generic services to larger numbers of customers.”

The problem is, as Pritchard points out, “If businesses are restricted to only using cloud services in the UK or even in the EU, the likelihood is that there will be less choice and services will cost more.” Furthermore, he argues for a more developed European cloud provider presence so that these cost and competition issues will be less keenly felt.

Pritchard’s opinion is that “if a vendor the size and scale of Rackspace thinks it is worth investing in Europe—and specifically the UK—for its cloud computing operations that has to be good news for both European businesses that want to use the cloud and for the UK IT industry.”

Full story at IT Pro