U.S. Cloud Computing Titans Invest in European Data Centers

Major American tech companies are building multiple data centers in Europe, with the end goal of dominating the cloud computing market there. The leading provider, Amazon Web Services, will soon open data centers in France and Britain. The second largest cloud computing provider, Microsoft reports it has spent $1 billion in the last year on data centers, for a total expenditure of $3 billion since 2005. Google, already in Belgium and Finland, will complete a new expansive data center in the Netherlands by the end of 2016.

The New York Times quotes Microsoft chief executive Satya Nadella that his company is building its “global cloud infrastructure in Europe so it can be trusted by the multiple constituents… We can meet the data residency needs of our European customers.”

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These U.S. companies are motivated by the fact that many Europeans are “questioning why America’s largest tech companies control how many of the region’s 500 million citizens use everyday digital services.”

Privacy is a hot button issue, and the European Union “continues to clamp down on the perceived misuse of people’s digital information.” Those U.S. companies are responding by moving that data out of the U.S. and into European data centers.

“Countries like Germany are well aware of data privacy, and it has made them more wary of where data is kept,” said Gartner cloud computing analyst Gregor Petri in Veghel, the Netherlands. “Local data sovereignty has become important, and American companies are now aware of that.”

That’s especially true in Germany, which passed legislation to keep data local and safe from “information requests by foreign governments, including the United States.” In 2014, Amazon opened several data centers in Germany, and Microsoft teamed with Deutsche Telekom, again to “comply with German legislation.”

“All the data stays in Germany,” said Rainer Strassner, who manages the Microsoft cloud program in Germany.

Other U.S. tech companies are focused on “speeding up digital services for everyday users across the 28-member European Union.” Although Apple is facing a demand to repay $14.6 billion in back taxes in Ireland, the Silicon Valley company is still spending “almost $2 billion” to construct two data centers in Denmark and Ireland by 2018, its “first such centers in Europe.” Facebook is both expanding an existing Swedish cloud computing center and constructing another in Ireland.

American cloud companies are building out in Europe for another reason: the cloud application service market is also booming there, with Gartner expecting it will “more than double, to $16.1 billion, by the end of the decade.” Although that’s only “one-third of the North American market, whose value is expected to reach $47 billion over the same period,” it’s is still large enough to be of importance.