Europe’s Fight Over Data Privacy Has a Silver Lining—a Cloud-Computing Boom

When it rains, it pours. The cloud is growing over Europe, to the tune of billions of dollars in investment from the world’s biggest tech companies.

Microsoft revealed it has spent $3 billion on data centers for its Azure cloud-computing platform in Europe to date. Its next stop is France, where it will join rival Amazon Web Services in building cloud facilities next year. Apple is reportedly preparing to plough close to $1 billion into a new data facility in Denmark, which is also where Facebook is said to be planning its own major data processing center.

The reason for this flurry in activity can be gleaned from Microsoft chief executive Satya Nadella’s tour of Europe, where he took the opportunity to announce something else, too: a book published by the Redmond giant titled “A Cloud For Global Good,” which includes dozens of detailed policy recommendations, with a sharp focus on privacy.

The book’s first chapter underlines the danger of “intrusive surveillance,” “uncontrolled collection of personal information,” and the “critical importance” of the right to privacy. “How do we preserve privacy and free expression while protecting public safety?” the book asks.

It’s a pertinent question, particularly in Europe, where privacy rules have been a bit of a mess lately. In 2015, the 15-year-old Safe Harbor agreement, which allowed data to be transferred between the EU and the U.S., was struck down by Europe’s highest court.

What followed was months of political wrangling between Brussels and Washington and a hastily unveiled new agreement called Privacy Shield. In the background, the bloc’s data-privacy framework—the General Data Protection Regulations—is in the final stages of an overhaul, handing more power to privacy regulators across the continent when it comes into force in May 2018.

As European privacy rules grow more complex, the European Commission is now trying to calm fears they could clog up data flows to the point that “data localization” occurs. That’s a bit like China, where companies doing business there have to store and process data within the country’s borders.

Andrus Ansip, a commission vice president in charge of its ambitious plan to create a unified market for digital goods and services across the bloc, known as the “Digital Single Market,” spoke Sept. 29 about the dangers of data localization, and a plan to prevent it from happening, to be revealed later this year.

“Some say that combatting forcible data localization is an area where the European Union should not act,” he said. “I say it is precisely the issue where we need to act now, before it is too late.”

Ansip singled out Denmark for praise in averting localized data. It changed its laws recently so Danish firms could store their data anywhere, so long as the tax authority could access them. It seems the big tech companies are broadly in agreement, and they’re not waiting to find out how Ansip’s plan will work.