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Safe Harbour Ruling Could Be A Boon For Europe

European cloud service providers may experience considerable growth

9Nov

The implications of the Edward Snowden leaks are still being felt today and they are having effects far wider than many would have envisioned. Far from just exposing a questionable practice by the US government with their data, it also opened up several questions about the US government’s surveillance practice regarding the use data from the Europe being stored in the US.

These questions have resulted in the European Union’s top court, the EUCJ, ruling that with the findings from the leaks, the US was not adhering to the 2000 Data Protection Agreement, commonly referred to as Safeharbour. This means that within the next couple of months, a few things could happen, but broadly speaking: the decision may be challenged in the courts (again) or a significant shift in where data is stored will take place.

The implications are simple, European data needs to stay in Europe. At present, most European data being used by US companies is being kept on US servers, meaning that they need to move it to within the EU. 

For larger companies like Facebook, Google and Amazon, this upheaval could represent a huge shift in data storage and the cost of their European operations. If we just take Facebook as an example, it has 307 million users in Europe alone, representing over 40% of the total population of the continent.

With all of the data being created by these people on a daily basis, moving the data from Facebook’s established US servers to European ones would be a costly and time consuming exercise. However, it is something that they could do easily without impacting their bottom line extensively. It is also important to remember that companies like Facebook, Google and Amazon have teams of lawyers who can potentially tie up any rulings in courts, allowing them the time to move data across to Europe without rushing.

For others this is not the case though, with JotForm Inc being a prime example.

In a WSJ article, their CEO recognizes that they must migrate their data across to Europe because they are not big enough to employ expensive lawyers to fight the case, let alone afford the potential financial penalties if they lost. In his words, ‘Compared to the other solutions, moving the data was the easiest for us.’

The court ruling is not the end of the line for a potential agreement on this issue though, as high level discussions between US and European officials are ongoing to see if there is a new agreement that could be made. However, it is thought that the damage that both the Edward Snowden leaks and the subsequent spying revelations may have done to relations between the two parties is putting these into question.

Given that European organizations are typically dominated by a few countries, namely Germany, the UK and France, at least one of these (Germany) was being spied on by the US, meaning that the damage done to this relationship may make future data sharing agreements difficult to come by.

The unpredictability of the situation is forcing smaller companies to make the move sooner rather than later, when it is likely that increased demand for large scale cloud server services in Europe pushes up prices. For many this could be a major expense and inconvenience, but the reality is that with this move, European cloud server providers will face the prospect of considerable growth. So what may be an inconvenience to many in the US, could end up being a boon in Europe. 

The US has the largest cloud storage usage in the world, so if even 10% of this needed to move back to Europe, the implications are clear - those who run cloud services there will be scrambling to get their business. 

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