Data Privacy Laws Driving Cloud Expansion Abroad
It's no secret that cloud mega-providers Amazon Web Services (AWS) and Microsoft have been spending the past few years significantly expanding their footprints outside of the United States.
A recent study by JLL, a multinational professional services firm whose properties include commercial datacenters, forecasts an uptick in that trend as worldwide demand for cloud services increases alongside concerns over data sovereignty and privacy.
"The acquisition of large amounts of server space in the U.S. by cloud companies continues, but is no longer as frenetic as it was in 2016," said Bo Bond, JLL's managing director and datacenter solutions co-lead, in a prepared statement last week. "Datacenter users are now turning their attention toward filling out their global datacenter footprint and making technology investments to keep them ahead in a rapidly changing industry."
In its latest "Data Center Outlook" report for the first half of 2017, JLL predicts that major providers like AWS and Microsoft will lease more cloud-centric datacenter facilities overseas in response to increasingly stringent data sovereignty laws.
One such law, the European Union 's General Data Protection Regulation (GDPR), is scheduled to take effect across the EU on May 25, 2018. Representing the first major overhaul of EU data privacy laws in 20 years, the GDPR will impact how data from EU citizens is protected, stored and managed by companies both inside and outside the EU.
Microsoft and AWS have both signaled that they are taking steps to ensure that their respective cloud platforms are compliant with the GDPR. In recent years, the two companies have extended their datacenter capacity into more EU member states, particularly Germany and France, which have some of the strictest data sovereignty laws in the region (for example, both countries require companies to store their citizens' data in datacenters located within their borders).
"Data sovereignty remains a hot-button topic for many international providers, as more and more government organizations continue to demand user data be stored within international borders, which is having profound impacts on not just Fortune 1000 companies, but also their go-to cloud services group, providers and operators," the report said.
Another, more obvious, driver of cloud's expansion into overseas datacenter facilities is sheer demand, according to JLL.
"Demand from enterprise and hybrid adopters of cloud capabilities are also spurring movement within AWS, Azure and others, as the big players look to globalize their datacenter solutions," the report said. "International facilities also caught the eye of many medium- and large-scale co-location providers looking to keep up with the datacenter industry."
As they become more familiar with "foreign deals," major cloud providers will acquire or lease even more datacenter facilities overseas in the second half of this year, according to JLL.
A copy of JLL's Data Center Outlook report is available here with registration.