Future data walls will offer localised start-up markets

As the world was shaken up by the impact of various allegations of digital espionage and data theft throughout the past few years, states have began to form plans for the placement of “data walls” to protect their domestic digital assets. This movement will create opportunities for security-based start-ups as well as nurture domestic technology roots.The impact on London corporate finance could be considerable if new EU plans are adopted in this regard, as the UK has traditionally functioned in a relatively transparent tech environment.

Following years of debate regarding a region-wide cloud network, the EU has been driven to action by the revelations of data infringements involving the USA. In a bid to protect its own digital assets, the European Commission in November 2013 suggested a strategy for the development of such a network. This move would enhance the region’s uptake of cloud services, as fears of data exposure would diminish significantly. Brazil has witnessed a similar shift in climate, with the country’s president giving green light to a national cloud network designed to keep data within in mid-2013. Laws are already being enacted in the major emerging market that would require cloud providers to maintain infrastructure inside the country and minimise exposure to foreign levers.

Local firms are set to be the biggest winners from a trend in the nationalisation of digital assets, as governments and organisations drive demand for the development of domestic information and communications technology (ICT) infrastructure, especially in email, cloud and storage tools. However, the free flow of ICT services across the globe could potentially suffer from the implementation of regional digital pockets. The USA, whose cloud service providers accounted for 85.0% of the global market in 2013 according to trade sources, would be impacted heavily by the preference given to trusted, domestic firms across the world.

Whether consumers would feel safer in a more fractured digital world is unclear. States could potentially implement cloud-usage laws that limit users from utilising external platforms for data storage, but that seems unlikely. After all, more bandwidth and interconnectivity will be required to maintain the weight of the global user base.

Members of the European Commission have set out a plan to develop the data bubble for EU members by 2020, while the body’s strategy paper believes greater implementation of cloud services could generate 2.5 million new jobs and savings of over €600 billion over 2015-2020. Major markets that have their own highly developed online spheres, such as China and Russia where local search engines and social networks are dominant, are likely to feel fairly safe from external data exposure, and may still be welcoming of foreign ICT expertise. T

Nonetheless, firms that are reliant on open global markets to drive business will likely see some lost revenues as more states become protective of their national data corridors. The Cloud Security Alliance, an industry group for the cloud segment, forecast in mid-2013 that US cloud computing providers may lose out on up to €26.0 billion by 2016 as a result of a more protective cloud landscape.




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