Is Cloud Computing A Global Market Yet? Nyet

Brazil, China, and some European countries have erected barriers to free flow of data, due to fears of U.S. domination of cloud market, says BSA.
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Some European and fast-growing developing countries such as Brazil and China fear the U.S. will run away with the emerging cloud computing market. As a result, they have erected barriers to data moving across their boundaries and impeded the development of a global cloud market, said a large software business group on Wednesday.

European countries frequently object to the U.S. Patriot Act and use it as an excuse for more barriers. In fact, the powers of the act granting permission to inspect data when hunting for evidence of terrorist activity are often found in their own laws, said Business Software Alliance CEO Robert Holleyman as his group issued a report on cloud computing Wednesday.

The alliance, which describes itself as the most international of IT industry groups, has 80 members, including Microsoft, Apple, Adobe, Dassault Systemes, Intuit, Intel, McAfee, Siemens, and Symantec. In its Global Cloud Computing Scorecard: Blueprint for Economic Opportunity, it charges that some countries "have their thumb on the scales" of what would otherwise be a freely emerging global, cloud economy, said Robert Holleyman, CEO of the alliance, in an interview before today's release of the cloud computing scorecard.

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"They are walling themselves in with conflicting laws and regulations," Holleyman said. Fast-developing Brazil and China are among the worst offenders, he said, but some European countries have been self-protective, with barriers that subdivide what could be a global cloud market into a potential "Rube Goldberg machine," he said.

U.S. vendors have jumped quickly on the prospect of supplying cloud services, including, Microsoft, Rackspace, GoGrid, Opsource, Savvis, and Terremark. But rules and regulations help keep citizens of other countries from using their services.

Germany has a long-standing rule that data collected from its citizens must remain within its borders, complicating the task of multi-national companies in the country. Health data on Canadian citizens may not be stored on U.S. servers due to the potential invasive snooping allowed by the Patriot Act. France also restricts the flow of data out of stated concern for its citizens' privacy, Holleyman said.

The scorecard ranked 24 countries on their policies of allowing cross border data flows and cloud operations, regardless of where the user resided. Japan ranked the highest for its policies, the U.S. ranked fourth, and China came in 21st. Australia ranked number 2. Germany was number 3, even with its restrictive policy.

"Lawmakers in the EU are putting their thumb on the scales. They are doing things with regulation to keep non-European cloud firms waiting at the border so local providers can catch up," he said.

"They say they have concerns with America's Patriot Act. But it's a red herring. The truth is they see the cloud as a chance to reshape the technology market in their favor," he said.

A legal scholar's article on the subject by a partner at Sidley Austin, a Washington, D.C. law firm, has been reprinted in the Bureau of National Affairs' Daily Executive Report, entitled, "Real Harmony in Cloud Computing Between U.S., EU Closer Than You Think."

"The U.S. State Department s actively pointing out there is no gap in practice between European countries and the U.S.," Holleyman added.

The Netherlands has similar provisions to the Patriot Act under Article 2 2(b) of the Personal Data Protection Act; likewise, in the UK under Section 5 of the Regulation of Investigatory Powers Act; also, Germany under Section 28(8) of the German Federal Data Protection Act.

Others in the top 10 were: France, 5th, Italy, 6th; UK, 7th; Korea, 8th; Spain, 9th; Singapore, 10th; Poland, 11th; Canada, 12th. In the middle were Malaysia, 13th; Mexico, 14th; Argentina, 15th. Holleyman said there is a gap between the U.S., Japan, and Western Europe vs. India, 19th on the list; China, 21st; Brazil, 24th; and to a lesser extent Russia, 16th. Turkey was 17th, South Africa 18th, Indonesia 20th; Thailand and Vietnam were 22nd and 23rd, respectively.

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