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U.S. cloud vendors adjust to Snowden effect, Privacy Shield

Clint Boulton | Sept. 5, 2016
AWS, Microsoft and Google are building data centers in Europe to address privacy concerns in a post-Snowden world. Cloud infrastructure revenue is rising, but how much better could be for U.S. vendors?

When whistleblower Edward Snowden shocked the world in 2013 by revealing that the NSA was allegedly siphoning data from U.S. internet companies, pundits proclaimed that winter was coming for American cloud vendors in Europe. Evidence now suggests those fears may have been overblown.

IDC said this month that U.S. cloud vendors have increased their combined cloud infrastructure revenue two-and-a-half-times in Western Europe, topping $2 billion since the Snowden Effect was supposed to freeze the market. Amazon Web Services (AWS), Microsoft, Alphabet’s Google and IBM increased their market share by a third in the region, hitting 40 percent in 2015.

Werner Vogels, CTO of
Werner Vogels, CTO of AWS..

AWS's cloud picture is rosy, even in Europe

AWS, with its $11 billion revenue run rate in 2016 and market dominance, has steadily increased its geographic footprint, operating data centers in 13 regions, with 35 availability zones. "We'll continue to roll out more regions, giving you local access and local access to your customers as well," Werner Vogels, CTO at AWS, said during his keynote at AWS' customer event in New York City last month.

Speaking to on the sidelines of the customer event, Vogels said that prior to Snowden, AWS struggled to motivate its European customers to encrypt their data. “Now that has Snowden has happened, that conversation is a lot easier with our customers.”

Vogels says European companies, which can choose to consume AWS services exclusively in its data centers in Germany or Ireland, have also acquired a greater awareness over who has control over their data and are more careful about compliance processes.

But many of the 190 countries in which AWS operates request data protection guarantees, often based on their localization laws. This means AWS must cater to some very specific requirements.

aws footprint
AWShas steadily increased its geographic footprint, operating data centers in 13 regions, with 35 availability zones. 

For example, AWS won energy giant Enel’s business by promising that the company’s data would be housed in a German facility. AWS also gained the trust of the Indonesia government, which decreed that it would allow its companies to operate in Singapore provided that they keep a copy of any personally identifiable information (PII) inside Indonesia. To address this requirement, AWS partnered with NetApp to give Indonesian companies a physical appliance on which to store PII in Indonesia. “You work with your regulator [within each country] and you find solutions that are practical for customers,” Vogels says.

“Just the fact that we have these discussions tells me… that you can’t just run it all from U.S. soil,” says Gartner analyst Carsten Casper, who is based in Germany and regularly advises U.S. cloud providers about their go-to-market strategies in Europe.


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