Germany weighs law that could mean more trouble for U.S. tech heavyweights

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European countries — as well as local telcos and tech providers — have long had issues with the region’s growing reliance on U.S.-based cloud vendors.  That tension is ratcheting up with news, first reported by the Wall Street Journal (registration required) that German politicians are talking about a new Internet security law that could restrict the use of U.S. vendors’ technologies.

Per the story:

The draft law, which is still being hammered out, envisions new requirements like revealing source code or other proprietary data for companies that sell information technology to the German government or to private companies that are part of industries Berlin deems critical to the country’s security.

This is in part a response to Edward Snowden’s revelations last year of U.S. intelligence agencies spying on European citizens — includign German chancellor Angela Merkel — often using U.S. technology as their conduit. But, in truth, European companies, acting out of self-interest, started pushing  for national clouds built on home-grown technology long before Snowden became a household name. In September, 2011, for example, Reinhard Clemens, then CEO of [company]Deutsche Telekom[/company] T-systems group, pushed German regulators to create a new certification to enable super-secure clouds to be built in Germany or elsewhere in Europe. France Telecom execs subsequently pushed for similar moves in their home country.

European vendors also often invoked the USA Patriot Act in their marketing pitches to woo customers who don’t like the idea that their data might be subject to U.S. subpoenas. Stung by this growing PR problem,  American tech powers have responded — [company]Microsoft[/company] for example, saying it would let customers choose which of several Microsoft Azure regions in which to store their data. Although, as David Meyer pointed out, that sounds like a nice idea but isn’t really all that affective since, in theory, that data could be subject to seizure even if it’s outside the U.S. if that data center is run by an American company.

just opened a data center region running out of Frankfurt

Obviously, the prospect of this bill becoming law — which the Journal said is likely — would benefit European tech vendors. And it would be very bad news for Amazon Web Services, [company]Google[/company], Microsoft, [company]Rackspace[/company], [company]IBM[/company], [company]HP[/company], et al.

3 Comments

cornfed superman

It is becoming more and more apparent that we can’t trust those Europeans to just bend over and accept US dominance in the tech sector. I don’t understand why — is it paranoia? hating us for our freedom? jealousy?

Brian Schnack

Irony? In light of Germany’s NSA-inspired protectionism, NSA is actively (shamefully) recruiting on Gigaom

Todd W. Shaffer

While the legislation comes from the right place in the heart of keeping data secure, ultimately this feels like nationalist promotion of German vendors. Ultimately these aren’t closed loop systems. If they have integration with any other system not located within Germany (almost certain) there are large portions of exposed data, which renders the efforts moot.

So of course Deutsche Telekom T-systems group is interested in creating an IaaS competitor to Microsoft, Amazon or Google, but to what end?

While a somewhat competitive single-geographic service portfolio comparable to Azure or AWS for IaaS *could* be created, the real value-add at the PaaS and SaaS level would not be easy to replicate. For example, I can’t see a German startup recreating Salesforce.com or Office365.

Good luck to them, but it doesn’t sound practical.

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