The clouds are gathering: Amazon Web Services controls 47.8% of the global public cloud market, with Microsoft serving a further 15.5%. In 2018, the United States Federal Government passed a law requiring American technology firms like Amazon and Microsoft to hand over requested data even if the servers on which data is stored are on foreign soil. On the other side of the Atlantic, the incoming Von der Leyen Commission wishes to see a digitally sovereign Europe that is not reliant on external cloud service providers.
Technological Sovereignty on the Political Agenda
This establishes the context for Germany’s October 2019 Gaia-X proposal for a European cloud network. Supported by France, the initiative aims to foster a European cloud market based on interoperability, security and storage guarantees. Germany and France hope that this will end Europe’s current reliance on US cloud service providers and create companies that can scale and effectively compete out of Europe. Envisioned benefits include increased data availability for European AI developments and a drive towards European digital sovereignty.
Details on the exact operation and design of this enterprise remain limited. The nature of the interoperability, security and data storage guarantees are still being determined, as is the exact meaning of “complying with technological sovereignty.” Where Amazon’s first reaction was to declare the plan as undermining the “fundamental benefits of cloud computing for customers,” Microsoft has shown interest in participating. While non-EU companies are theoretically welcome, the German Economy Ministry has stated they will only be allowed to participate if they “share our goals of data sovereignty and data availability,” without clarifying whether US companies would meet this requirement if they are compliant with the US Cloud Act.
The idea of a European Cloud is not new. France’s attempts at promoting European cloud providers failed shortly after initiation in 2016 due to lack of interest. European businesses tend to prefer US providers like Amazon Web Services due to their competitive pricing. A spokeswoman for the German Commerzbank SA described Gaia-X as an “important initiative”, but underlined that the pragmatic balance between performance, services and costs ultimately would determine the success or failure of the programme.
Why Does this Matter?
The European interest in establishing a cloud player is clear: Europe cannot be technologically autonomous if its consumers, businesses and governments rely on foreign technology service providers that do not abide by European values. European business and private consumers will benefit from storing their data with providers under regulation that ensures security, privacy and interoperability. This would also introduce more competition into the global cloud provider market.
With the details of the plan unclear, its potential to elevate European cloud providers to a global level is idealistic. However, the Franco-German cooperation, alongside the incoming Commission’s drive to support EU technology initiatives, could be the recipe for success for a cross-border project of this magnitude. It will carry significant implications for existing cloud providers and those looking to enter the market as some may find their current business model incompatible with the new environment. Additionally, the current US Administration may respond negatively to initiatives perceived to discriminate against American businesses.
Should enough political will be found and a market-viable project be funded, the Gaia-X project will fundamentally alter the European playing field for cloud companies. “European” firms will be offered an opportunity to grow beyond the vulnerable start-up phase and increase their global market share. “Non-European” firms will, however, have to convince European policy-makers they should be allowed to continue operating in the EU.
Author: Casper Buijs, Access Partnership