The Future of Public Cloud in Europe

Public cloud, a model for delivering computing services like servers, storage, databases, networking, software, analytics, and artificial intelligence over the internet, is provided by companies such as Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform (GCP), and Alibaba Cloud. These providers offer services on a pay-as-you-go basis, enabling customers to adjust their usage according to their needs and pay only for what they use.?

Public cloud offers many benefits, such as cost-efficiency, flexibility, scalability, reliability, security, and innovation. However, it also has challenges, especially in the European market, where data privacy, sovereignty, and regulation are paramount. In this article, we explore these trends and opportunities that are set to shape the future of public cloud in Europe, helping you make informed decisions about your cloud strategies.?

Data Privacy and Sovereignty

Understanding data privacy and sovereignty is vital to public cloud adoption in Europe. Data privacy protects personal data from unauthorised access, use, or disclosure. Data sovereignty, a complex issue in the digital age, pertains to the legal jurisdiction over data based on its storage, processing, or transfer location. In the public cloud context, data sovereignty influences data centre locations, data transfer across borders, and compliance with local laws and regulations.

The European Union (EU) has strict data protection laws, such as the General Data Protection Regulation (GDPR), Digital Operations Resilience Act (DORA), and Network & Infrastructure Security Directive (NIS2), which aim to regulate and safeguard the integrity of internet data and users' rights regarding data protection and data usage.

?The GDPR poses a challenge for public cloud providers, as they must ensure that their services comply with the regulation and can guarantee the location and security of their customers' data. This is especially difficult in global cloud networks, where data may be stored or processed in multiple locations across different regions and countries.

To address this challenge, some public cloud providers have established local data centres in Europe or have partnered with local providers to offer data residency options for their customers. For example, AWS has six regions and 24 availability zones in Europe, Azure has 15 regions and 54 availability zones in Europe, GCP has eight regions and 24 availability zones in Europe, and Alibaba Cloud has three regions and six availability zones in Europe. These local data centres allow customers to store and process their data within the EU and comply with the GDPR and other local regulations.?

However, more than local data centres may be needed to satisfy the data sovereignty requirements of some European customers, especially in the public sector, where national security and strategic interests are at stake. Some European countries, such as France and Germany, have developed national cloud initiatives like Gaia-X to create a sovereign and secure cloud infrastructure independent of foreign providers. These initiatives aim to foster a European cloud ecosystem based on common standards, values, and rules that can compete with the global cloud giants.

Cloud Regulation and Competition

Another challenge for public cloud adoption in Europe is the issue of cloud regulation and competition. Cloud regulation refers to the legal framework that governs the cloud market, such as antitrust, taxation, cybersecurity, and environmental policies. Cloud competition refers to the level of diversity and innovation in the cloud market and the balance of power between different cloud providers and customers.

The EU has been active in regulating the cloud market to protect the interests of its citizens and businesses and promote a fair and competitive cloud environment. The EU has launched several initiatives, such as the Digital Single Market, the European Cloud Initiative, the European Data Strategy, and the Digital Services Act, to create a harmonised and integrated digital market that can boost the growth and innovation of the cloud sector.

The EU has also been vigilant in enforcing its antitrust and tax laws against the dominant cloud providers, such as AWS, Azure, and GCP, which account for more than 60% of the global cloud market share. The EU has accused these providers of abusing their market power, engaging in unfair practices, and avoiding taxes and has imposed several fines and investigations on them. For example, in 2018, the EU fined Google €4.34 billion for breaching antitrust rules with its Android operating system, which cloud customers widely use. In 2020, the EU opened a formal investigation into Amazon's use of data from third-party sellers on its e-commerce platform, which is linked to its cloud services.

The EU has also supported the emergence of alternative and niche cloud providers, such as OVHcloud, Scaleway, and Hetzner, which offer more specialised and customised cloud solutions for different customer segments and use cases. These providers can leverage their local presence, expertise, and reputation to attract customers looking for more tailored and flexible cloud options or wary of the global cloud giants.

Cloud Innovation and Transformation

Despite the challenges, public cloud adoption in Europe is also driven by the opportunities and benefits cloud innovation and transformation can bring. Cloud innovation refers to developing and adopting new and advanced cloud technologies, such as artificial intelligence, machine learning, big data, the Internet of Things, edge computing, and quantum computing. Cloud transformation refers to changing and improving business processes, models, and outcomes cloud technologies enable.

Public cloud providers constantly innovate and improve their offerings to meet their customers' evolving and diverse needs. For example, AWS launched several new services and features in 2020, such as AWS Wavelength, AWS Outposts, AWS Local Zones, and AWS Nitro Enclaves, enabling customers to deploy and run their applications closer to the end-users at the network's edge. Azure has also introduced new services and features in 2020, such as Azure Arc, Azure Synapse Analytics, Azure Quantum, and Azure Communication Services, which enable customers to manage and optimise their hybrid and multi-cloud environments and leverage the power of data analytics and quantum computing. GCP has also unveiled new services and features in 2020, such as Google Cloud Anthos, Google Cloud AI Platform, Google Cloud Healthcare API, and Google Cloud Confidential Computing, enabling customers to modernise and secure their cloud applications and harness the potential of artificial intelligence and healthcare.

Public cloud customers are also innovating and transforming their businesses by leveraging the cloud technologies and services available to them. For example, Siemens, a global industrial giant, has migrated its entire IT infrastructure to AWS and has used AWS services, such as AWS IoT Core, AWS Lambda, AWS SageMaker, and AWS Greengrass, to develop and deploy innovative and connected products such as wind turbines, trains, and factories. Lufthansa, a leading airline company, has partnered with Azure and has used Azure services, such as Azure Cognitive Services, Azure Bot Service, and Azure DevOps, to enhance its customer experience, such as by creating a chatbot, a voice assistant, and a flight tracking app. Spotify, a popular music streaming service, has moved its entire data infrastructure to GCP and has used GCP services, such as BigQuery, Cloud Pub/Sub, Cloud Dataflow, and Cloud Dataproc, to analyse and process its massive and complex data sets such as user behaviour, music preferences, and recommendations.?

Conclusion

The public cloud is a fast-growing, disruptive and dynamic market that offers many opportunities and benefits to providers and customers. However, it faces some challenges, especially in the European market, where data privacy, sovereignty, regulation, and competition are key issues. The future of the public cloud in Europe will depend on how these challenges are addressed and how the cloud ecosystem evolves and adapts to the changing needs and expectations of the market.