Gaia-X: the Next Stage in the Continental Cloud Conflict

Interesting developments recently in the world of Hyperscalers and Cloud hosts. A coalition of EU companies announced that they had created a new effort called Gaia-X to compete with Google, AWS, and Azure. Though it is worth pointing out Gaia-X say this is not their goal, you can’t help but think it is the natural result.

Gaia-X, for those not following the news, is planned to be a cloud hosting hyperscaler that will give European companies a place to host their data safe in the knowledge that it is not subject to the whims, attitudes, and policies of large American companies.

This new not-for-profit European based entity will, if successful, free European companies from relying on large American corporations for hosting and cloud needs. Whilst many companies are happy to turn to these large American companies for their hosting needs, there is also push-back within Europe as the EU imposes stricter controls over data and its usage than America does.

Europe favours stricter regulations, and whilst currently that allows these companies to manage EU data, as long as it is stored in the EU or falls under the data-shield that has been established with the US, it will be curious to see how this relationship continues given the increasing divergence between data privacy rights and ideals in the two regions.

The companies themselves also pose a problem as they are effectively slowly developing a Triopoly (Like a monopoly but with more), both on technology, and availability but also on partnerships and functionality.  The truth of the modern tech-world is rapidly becoming that if you are not either small enough to be hosted locally or aligned and compatible with the big cloud-hosts your product is not viable.

Covid-19 highlighted this, if your technology was not ready to provision and then scale in the cloud (potentially your own if you were a large company), you lost that immediate “need a solution now” business that the virus brought with it.

Currently the dominance of the “big-three” is absolute, with Microsoft pulling slightly ahead in a recent 750 person survey of IT Leaders across EMEA, U.S., and APAC by Vanson Bourne and Barracuda Networks – available here.

Many regions in the world do have differing data management and hosting guidelines. For example, you can use AWS, and Azure in China, both of these operate through created or partnered Chinese based organisations, require a separate account from the regular services, require all that data to be hosted in-country and be subject to all the laws of the country it is hosted in. Google notedly does not have any services in China outside of Hong Kong, and whether it will someday enter the Chinese market has been a hot topic for years.

Speaking of China, where it is not just the big players that operate, we need to remember that the players in the chart below from Canalys also operate in the region, often commanding bigger share than the big US players.

Where your data is hosted is a big topic for companies. Which is why one of the core reasons for the creation of Gaia-X is data sovereignty.

“Data sovereignty: Existing cloud offerings are currently dominated by non-European providers, that are able to rapidly scale their infrastructure, and that hold significant market power and large amounts of capital. At the same time, we are seeing growing international tensions and trade conflicts across the globe. Europe needs to ensure that it can establish and maintain digital sovereignty permanently.”

We have seen the regulatory environment for EU based companies grow stricter with GDPR. The European Securities and Markets Authority is similarly concerned about the amount of outsourcing of data services and where/how data is stored/managed.

And it is no shock to consider why they might be concerned. Though the below research by Statista is from late 2017. It highlights a specific problem, the dominance of US companies and US data ethos in the ever-growing cloud world.

The fact is that European companies are not happy with the ongoing US dominance in the cloud hosting space. Even if that company has a separate division and specific rules for your region you are still subject to the success and decisions of a company that is outside your control.

So that leads us to Gaia-X, a European answer to a technological need. A guarantee that you will have an organisation that is aligned with European data ethics, that falls firmly within the boundaries of the EU’s legal control and protections. This is something that many European companies will take comfort in. I predict and expect that over the next few years, we will see more divisions of where data is hosted along ethos, and continental divides. After data is often considered the key to the technology and social changes of the future, why would you give that control to anyone else?

There are more implications to re-homing data sovereignty in the EU, beyond security and privacy. Gaia-X calls them out as Data Availability and Innovation, both of which I will be tackling in a future article. Stay tuned for that.

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