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January 17, 2012

Europeans Go Local for Cloud

Tiffany Trader

The global cloud computing market was about $40.7 in 2010, and is projected to reach $241 billion in 2020, according to a Forrester Research report titled “Sizing the Cloud.” So far the United States has been the dominant player, while the cloud has been slow to catch on across the pond. But that appears to be changing. European countries, not wanting to miss out on this lucrative opportunity are starting to create policies designed to capture a piece of this lucrative market.

A Bloomberg article published today reports on wave of protectionism that is taking place in the Europe as it seeks to establish a strong base of home-grown cloud technologies. In France, for example, France Telecom is partnering with Thales SA to offer on-demand services of hardware, software and applications using domestic sources. Meanwhile, German lawmakers are developing stricter privacy laws that would restrict the location of servers that contain sensitive data.

The move to develop stronger domestic cloud markets in Europe goes beyond the economic potential. There is serious concern over the erosion of privacy rights that has been occurring in the United States under the auspices of Homeland Security. The Patriot Act, for example, states that US authorities can secretly seize data from tech companies without the user even knowing. According to the Bloomberg article, Microsoft Corp. has said that if asked, it must turn over data to US authorities as part of the Patriot Act, even when those files are stored in Europe.

At present, the cloud market is still heavily tilted to the US and Asia. According to a study by Informa’s Telecom Cloud Monitor, European operators accounted for only 7 percent of the $13.5 billion global operators as a whole committed on cloud assets in 2011, while North American and Asian operators accounted for 90 percent, or $12 billion. But that could change. Europeans have proven especially privacy conscious, and keeping their cloud services domestic may also serve to level the playing field. Already, in 2011, half of the cloud services launched in the EU relied on European companies.

We live in a global marketplace, a business reality that Gartner analyst Frank Ridder clearly understands. “You always have to keep in mind that you’re participating in a model that’s geared toward global application,” he tells Bloomberg. “Governments need to understand that if they want to promote cloud computing they have to open up rather than dig in.” That statement is equally true whether its directed at Europe or US government.