EU targets 1 trillion euro GDP gain 'in cloud'

BRUSSELS, BELGIUM: EU telecoms regulators spelled out how they want to accelerate the use of 'cloud' computing by public bodies and companies, in the hope of boosting the bloc's GDP by nearly 1 trillion euros through the next eight years.

Concerns about privacy and data loss have hampered the take-up in Europe of cloud computing, where customers' data is stored on remote servers that can be accessed from anywhere.

The European Commission wants to address such worries by getting experts to clarify tricky legal questions on data protection and to develop a global privacy standard, it said at a press briefing on Thursday.

"You shouldn't have to have a law degree to use the cloud," Neelie Kroes, the EU's Telecoms chief said.

"But today, many potential users think it's too complicated, too risky, or too untrustworthy."

European customers complain that many cloud contracts do not specify who is liable when data is lost. And a proliferation of different standards for privacy and security can be confusing.

Commission research shows cloud computing can cut companies' costs by up to 20 per cent and groups like Amazon.Com Inc , Microsoft Corp, Google Inc and Salesforce.com Inc have been developing new products and services to attract business 'in the cloud'.

The EU executive also said implementing the strategy could yield 957 billion euros in increased EU GDP in the years through 2020, c reating 3.8 million jobs.

But cloud vendors who have a hard time selling their services in Europe say the Commission's economic forecast may be too optimistic.

Servers in the EU's public sector are up to 90 per cent under-used, Commission research shows. Ideally servers should work around the clock by having clients in different time zones.

"It's been really painful to grow in Europe," Justin Pirie from Mimecast, a British cloud vendor, told Reuters. His company is directing more business towards the United States after European clients insisted on using servers in their home country.

"For us that's half a million in investments per country," he said.

NATURAL CAUTION

Some U.S.-based companies report that deals with European customers often hinge on whether they trust the company with their data or not.

"There is a natural caution in Europe compared to some parts of the world and providers need to be clear about their responsible data management practices," said Microsoft's Mark Lange

Companies with servers in the United States say their customers fear their data will be intercepted under U.S. anti-terror law though those concerns might be overdone.

"If interception is so much of a concern they should not only avoid U.S. cloud providers, but also avoid using the UK telephone, the Internet, and the postal system," said Clive Gringas, from law firm Olswang.

Some EU-based vendors exploit these worries by publicly stating their non-compliance with U.S. anti-terror laws.

But Thomas Boue, director of the Business Software Alliance lobby group, worries such moves fragment a market that is already being chopped up along national lines.

Others see the attractions of being close to their users.

IT service provider Colt Group SA, which has 20 data centres in 10 countries, says financial clients like the London Stock Exchange appreciate the proximity of Colt's servers because it enables them to connect to the exchange in 100 microseconds to conduct high-frequency trades.

"The laws of physics tend to come into it," Steve Hughes, the company's cloud specialist said.

But cost-cutting in less well-off countries offers vendors some hope.

Greece, whose debt-ridden economy is under an EU/IMF rescue programme, shows a bigger cloud appetite than its biggest European creditor, Germany.

"Maybe it's just that their hardware is coming up for renewal," Robert Jenkins, co-founder of Zurich-based hosting firm CloudSigma, said.