The Right Mix of Policies to Promote Cloud Computing

With cloud computing, the opportunity is clear. Public IT cloud revenue will grow to more than $70 billion by 2015. Even more significant, innovation enabled by the cloud will generate more than a trillion dollars in revenue over the next few years according to one estimate, and will create millions of jobs around the world. The trouble is, many governments are working to seize the cloud opportunity in misguided ways, such as by walling off domestic markets so local players can operate free of international competition.

BSA has conducted extensive research on this issue for our Global Cloud Computing Scorecard and our recent report on a pernicious new wave of IT-focused protectionism in emerging markets. And the studies show a clear pattern taking hold, as I testified today before the House Judiciary Subcommittee on Intellectual Property, Competition, and the Internet.

For example, in the name of privacy and security, we are seeing countries require data to be housed inside their borders. Even non-sensitive commercial information. You would have to build a local data center to do business there. That could be a prohibitive burden for many international cloud providers.

Some countries are going even further by adopting rules that would explicitly prevent personal information from being transferred across their borders. These are bad signs for the global economy, especially for IT innovators that depend on selling products and services internationally.

The trend has to stop. The United States, Europe, and other governments around the world need to urgently adopt a better mix of cloud policies. That should start by getting three big things right:

  • First, privacy and security rules need to protect consumers while also encouraging robust digital commerce.
  • Second, there needs to be cooperation on a free-trade agenda that ensures data can flow across borders.
  • Finally, we need to promote innovation in the cloud the same way we promote it everywhere else. That means protecting innovators' rights when they bring new products to market, and it means stopping all forms of cybercrime and theft.

BSA has broken these steps down into a more detailed, seven-part policy blueprint, which we released as part of the Cloud Scorecard. And in my testimony today, I suggested some specific things the Judiciary Committee can do to help. For example:

  • There is a myth that cloud computing puts an end to piracy. In reality, piracy is evolving. The Judiciary Committee can ensure we vigorously enforce laws against IP theft -- no matter how the technology is set up.
  • The Judiciary Committee also can take the lead in reforming the Electronic Communications Privacy Act (ECPA). In the cloud era, digital files should be subject to the same laws as paper files.
  • Finally, it is important to dispel myths about the USA Patriot Act. Governments and commercial interests around the world are scaring customers away from US cloud services by portraying America's law as unusually invasive. The fact is most governments have authority to access data in order to protect national security. The Judiciary Committee has authority to ensure that message is broadcast far and wide.

The stakes in this are enormous. If the global cloud market gets carved into country-sized pieces it will be worth far less than the sum of its parts.