Data sovereignty not a real concern: Digital Realty

Data sovereignty not a real concern: Digital Realty

Summary: When it comes to data sovereignty, "unless you're doing something wrong or against the law, you have nothing to worry about," according to the datacentre provider's senior vice-president and regional head for Asia Pacific, Kris Kumar.


Data sovereignty has been a persistent concern for Australian companies that think their data has less protection when it's hosted overseas, but datacentre provider Digital Realty, among other global companies, doesn't believe that concern is legitimate.

The US Patriot Act has become the bogeyman for when it comes to why Australian companies should be keeping their data onshore. There is a perception — which some claim is a misconception — that the Act gives the US government unfettered access to data hosted in the US or by a US company, a view that Australian cloud providers have used to market their own services.

US-based provider Microsoft is more dismissive of this perception, even claiming that Australia's data-protection laws are just as bad, if not worse, compared with the US. The Commonwealth Bank, which is a client of Amazon Web Services (AWS), has come out to rubbish the data sovereignty issue as well.

In terms of the Patriot Act fears, if a company isn't doing anything nefarious, then they shouldn't have to worry about the US government gaining access to their information, Digital Realty's senior vice-president and regional head for Asia Pacific Kris Kumar told ZDNet.

"Unless you're doing something wrong or against the law, you have nothing to worry about," he said. "Any act that exists need warrants to access that data — the government can't clamp down and access the data willy-nilly."

According to Kumar, data sovereignty shouldn't be much of a concern for Australian businesses.

The company has a network of datacentres across the globe, and in the last 14 months, Digital Realty has made a big push into Australia, building and acquiring several datacentres in the country.

"I think data sovereignty is a partially made up issue," he said. "There is no regulatory impact to hosting data offshore other than taxation issues, and tax offices globally are working to pin down the tax provisions under some of the business offerings from the global cloud providers — but that's a whole separate issue."

Cloud providers that host data in datacentres overseas are aware of the importance of keeping customer data safe, and are smart enough to know they cannot compromise on this matter, Kumar said.

He fears that the data sovereignty concerns in Australia will stifle the growth of the country's cloud industry.

"There is a lot of hype around this issue, and some protectionism going on in terms of the current domestic environment in Australia," Kumar said. "Cloud is pretty much an organism that multiplies, grows, connects, and does various things. If you start to create a situation where you believe everything has to be hosted onshore, you will create a data desert rather than a data oasis.

"Having your data disconnected from the rest of the world will do no good for anybody from a business perspective."

It pays to be part of a globally connected cloud, according to Kumar, though he acknowledged that it made sense to host business critical data and applications that are latency and time-sensitive locally.

"But the productivity applications such as Microsoft 365 and AWS services for computing are not customer data sensitive and can be done from anywhere," he said. "There is a place in the world for both onshore and offshore hosting."

Australia's "analysis paralysis"

In terms of the legal and regulatory side of things, Digital Realty found that it was easy doing business in Australia's mature market. There are plenty of opportunities for the datacentre company, as enterprise organisations look to shift their inefficient server rooms into larger third-party datacentres, according to Kumar.

But he finds Australian businesses are very slow at making decisions, which is a hurdle for Digital Realty.

"I think Australia suffers a bit too much from 'analysis paralysis' in terms of its business environment, and that could be slowing it down," Kumar said. "There's also too much focus on commodity and resource-based businesses, as opposed to service-based businesses, and I think the future of this country really is service-based economies."

Digital Realty has found sales cycles to be longer in Australia, compared with the US, and to overcome this, businesses need teams that are able to analyse technology needs quickly and make faster decisions in terms of procuring services, according to Kumar.

"In the US, our sales cycles are much shorter, and people make decisions quickly — good or bad," he said. "They make decisions and move on, and you can see the benefits that the economy gets from that.

"I think Australia needs to be a lot more competitive in the global sense, in terms of decision-making. The country generally sticks to what it knows, and is not very adventurous compared to the rest of the world."

Topics: Legal, Data Centers, Australia

Spandas Lui

About Spandas Lui

Spandas forayed into tech journalism in 2009 as a fresh university graduate spurring her passion for all things tech. Based in Australia, Spandas covers enterprise and business IT.

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  • Yep, the police are absolutely trustworthy

    But I think I'd prefer to be served in person with a search warrant and then provide the demanded data. At least then, I know about it.
    John L. Ries
  • US Hosting Firms Just Don't Get It

    It is amazing how all the US based storage companies are dumping on the Patriot Act and Australian companies who use this as selling tool and they can where "Personal or Sensitive Information" is concerned. The cloud is a great tool and should be more widely used by organisations, but not for the storing of "Personal or Sensitive Data".

    You cited in the article about the CBA, note the comment by the CIO

    While Harte is an unabashed advocate for the cloud, there is a line drawn when it comes to customer data. In defending this stance, Harte told ZDNet that CBA's private customer data would never be used in any third-party services, and that "privacy and security are paramount."

    I think that says it all.... Use the cloud for anything not just for personal data
    Paul Waite
  • More self-serving tripe

    The front of some of these companies is unbelievable. What they are really saying is that we would like to make lots of money from Australian companies, without having to pay any local tax or make any local investment.
    Australian individuals and companies have every right to expect their information to remain within the borders of their own country where it is subject to Australian law.
    Having a vibrant data centre market will promote the local cloud industry, not stifle it.
  • "if a company isn't doing anything nefarious..."

    The problem with comments like these are that the very people who designed the Patriot Act are the very people determining what is nefarious. Ask Kim Dotcom. Not all laws are fair, logical or created equal. What you may be doing in business that's legal today can be (and has been) easily decreed illegal with the stroke of a pen.

    I prefer my data kept within Australia because I am more familiar with Australian laws and bureaucracy. At least we have some sort of representation here in Australia but none looking out for our interests in the US.

    How about these ideas shared,
    "But he finds Australian businesses are very slow at making decisions, which is a hurdle for Digital Realty."
    "In the US, our sales cycles are much shorter, and people make decisions quickly — good or bad," he said. "They make decisions and move on, and you can see the benefits that the economy gets from that."

    I see the benefits. In the US the banks were allowed to make decisions *quickly* and without any real oversight (bad) and now the US has tent cities full of former middle management we rarely hear about and shocking unemployment.

    Strict banking regulations and oversight in Australia prevented our banks from suffering too much in the world-wide domino effect of the GFC (good). Australia is an envied country because of the good times, in comparison to most western economies, we're enjoying.

    Sure, technology is moving at a frenetic pace and we keep hearing we need to keep up with the world to benefit our economy. But is there any economy out there we're envious of that's making decisions quickly?
    Jenny Hamilton