Will EU policy smother the cloud?

Get the back story of how EU policy makers discovered the value of cloud, and the decisions they'll take over the coming year about regulating the industry.
Written by Phil Wainewright, Contributor

People in the tech industry generally prefer not to get caught up in politics, but it's now becoming vitally important to do so, especially if your business is in any way connected to cloud computing in any European market. Read on for the back story of how policy makers at the EU have now officially discovered the cloud, and the decisions they'll take over the coming year about regulation of the industry. This is something I've been close to as chair of EuroCloud UK and a vice-president of EuroCloud in Europe (both unpaid roles). It's now time to for everyone to take note of what's going on.

First of all, a bit of context. In the tech industry, all eyes tend to be on the US and thus it's easy to underestimate the size and complexity of the European market. Europe is a bigger economy than the US — $17.5 trillion in the 27 EU member countries alone, according to World Bank figures for 2011, compared to $15 trillion for the US. So why does it have less impact in tech? The trouble is, it's far more difficult for any one business to exploit that market value (even a cloud business) because of the EU's 23 different languages, 11 currencies, and a myriad of different business regulations, practices and cultures. US tech companies find it much easier to scale up fast because they don't have to contend with such barriers.

Breaking down those national barriers to allow more business expansion and competition has been one of the main objectives of the EU ever since its foundation. In a sense, the EU is the political equivalent of cloud computing — instead of having lots of inefficient individual fiefdoms, the countries of Europe pool their sovereignty so they can have more agile, cost-effective and faster growing economies. Where the analogy breaks down however is that, whereas cloud computing is led by technologists and entrepreneurs, the EU is run by eurocrats and politicians.

The politician in charge of the EU's strategy for cloud computing is Neelie Kroes, Vice President of the European Commission and Commissioner for the Digital Agenda. She's in a hurry to make her mark before her term of office ends in 2014. Commissioner Kroes launched work on the strategy with a speech at Davos in January last year and was all set to announce the finished strategy this June when the final draft was delayed on the desk of European Commission President, Jose Manuel Barroso, who you may have heard of as a key player in the Eurozone crisis. Realising the potential impact an effective cloud strategy might have on growth in the midst of Europe's economic woes, he held up the strategy until he had made sure all of his colleagues in the Commission were ready to put their full weight behind it. The strategy was finally announced last month.

Who, you may wonder, is it that says this cloud strategy will stimulate growth? Step forward technology market researcher IDC, whose report (PDF) accompanied the draft strategy. The report estimates a €162 billion benefit to the EU economy by 2020 from implementing policy steps that remove barriers to adoption of cloud computing. That's almost three times the economic impact without policy intervention. And the cloud market itself will more than double thanks to policy actions, the report adds.

How can any politician dare argue with figures like that? €162 billion is equivalent to an entire percentage point of GDP, hugely significant at a time when growth is so elusive and yet so crucial to Europe's economic welfare. Suddenly, the stakes have become much higher. The politicians can't afford for their cloud strategy to fail. Yet in their eagerness to stimulate the growth of the cloud in Europe, is there a risk they'll smother it instead? It's up to the industry to speak up and make sure the proposed strategy doesn't kill it. Here are the key actions set to be delivered under the strategy over the next year or so:

  • European standards body ETSI to co-ordinate work on reviewing the "jungle" of existing cloud standards to identify those necessary to deliver interoperability, data portability and reversibility
  • Work with ETSI, ENISA and others to support EU-wide certification schemes for "trustworthy" cloud providers
  • Defining model contract terms and service level agreements for cloud computing
  • Establishing a European Cloud Partnership designed to provide consistency in how the public sector purchases cloud services across Europe

EuroCloud will stay close to the evolution of the strategy over the coming year and is (in my biased opinion) an important channel for the industry to make its voice heard — especially the mass of smaller players who can't afford their own lobbyists. Meanwhile, if you're in London next month and would like to take part in a fun debate about the many serious issues raised in this blog post, check out the details of EuroCloud UK's November 14th meeting.

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