The Trade Politics of Cloud Computing

Last week The Delimiter ran a story about the Office of the United States Trade Representative (USTR) criticizing Australian organizations for their preference to host cloud data within Australia’s borders:

A number of US companies had expressed concerns that various departments in the Australian Government, namely, the Department of Defence, The National Archives of Australia, the Department of Finance and Deregulation, the Australian Government Information Management Office (AGIMO) and the State of Victoria’s Privacy Commissioner had been sending negative messages about cloud providers based outside the country, implying that “hosting data overseas, including in the United States, by definition entails greater risk and unduly exposes consumers to their data being scrutinised by foreign governments.

Canadian organizations harbour many of the same concerns as their Australian counterparts, although to the best of my knowledge Canada has not yet been on the receiving end of the USTR’s ire. Privacy commissioners in both Canada and Australia cite the USA PATRIOT Act as a major concern when it comes to storing sensitive data state-side.

US-based companies have started speaking up about the friction the PATRIOT Act creates for them. Microsoft, for example, recently lost out on a deal to license its cloud-based productivity package Office 365 to BAe Systems because of concerns relating to the PATRIOT Act. According to an article at Ars Technica, Microsoft found that even if it stored BAe’s data outside of the US it wouldn’t be beyond the reach of the US government:

After researching the PATRIOT act, Microsoft found that regardless of where data was stored, it could not ensure that data would not be turned over to the US government as the result of a National Security Letter or other government request, because the company is governed by US law.

For the USTR to complain that Australia, and countries like it, are erecting trade barriers to make US-based cloud computing providers less competitive in their home markets is disingenuous at best. The US has erected its own trade barrier in the form of the PATRIOT Act, and if it wishes to make the prospect of storing data in the US more palatable to international customers, it must radically reform its data privacy laws.

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