Given data security concerns, it’s time Europe built cloud services as a public utility

There is growing concern that European Union citizens, businesses and Member States are losing control of their data, their ability to innovate and their ability to control the digital environment.

Europe’s strategic autonomy has been brought into sharp focus by our lack of power to respond independently to European security challenges.

At the same time, we rely entirely on non-EU companies to provide strategically important cloud services.

The so-called “public” cloud is really a very private and very profitable venture for a small number of non-European megacorporations. As Jeff Bezos, founder of Amazon Web Services, the world’s largest cloud provider, famously said, “Your margin is my opportunity.”
Cloud computing has evolved into a vast and complex ecosystem of technologies, products, and services.

It has spawned a multi-billion dollar economy in which cloud providers compete for an ever-growing market share. The market is worth more than 180 billion euros, which is roughly equal to Hungary’s GDP.

The five largest cloud providers are Amazon Web Services (AWS), Google, Microsoft Azure, Alibaba and IBM.

You will notice that something is missing from this list – not European companies. The US and China monopolize the business.

AWS alone now has annual revenue of $62 billion with an estimated margin of 35 percent. AWS accounts for just 16 percent of Amazon’s total sales, but accounts for the bulk of the company’s overall profits.

The recently ended French EU Council Presidency had the EU’s digital sovereignty as the cornerstone of its efforts to shape the future of the EU.

They want to support the development of a digital infrastructure that will help European innovators thrive and enable Europe to be a standard setter in the future.

The recently adopted EU law on digital services will create a safe digital space for citizens and businesses. With €747 billion in EU online sales in 2020, it’s not a moment too soon to step up our protection.

Cloud computing is the backbone of any modern business software. If your business uses software, it’s almost definitely using the cloud. Cloud is now an established and highly profitable technology. About 42 percent of companies in the EU use cloud computing.

To strengthen digital sovereignty and provide EU companies with an innovation platform, Europe should build a true public cloud – a digital commons that offers European start-ups and established companies a place to develop their products without theirs margins of foreign cloud providers are eaten up . It would be the cloud as a public utility. The enormous margins of the current market leaders are our opportunity.

A utility company such as gas or water offers an undifferentiated product across all providers. The cloud doesn’t.

Even the most similar product, a virtual machine, comes in different variants. This is not the case with a utility company.

At AWS, which doesn’t break out margins by specific services, it’s generally assumed that just a few services account for the bulk of revenue. EC2 – one of the oldest and most popular services – contributes an estimated half.

If we took the current AWS regions in Europe – Frankfurt, Ireland, London, Milan, Paris and Stockholm – and mirrored that spread with public infrastructure offering the top five most popular cloud infrastructure services, we could give European business and innovation a big boost Giving the arm while ensuring digital sovereignty and autonomy.

There is a significant upfront investment required to hire the staff and build the data centers, but we should invest in the future.

In any case, European governments and companies are already spending tens of billions of euros on the cloud every year.

We will never be able to achieve this most important part of digital sovereignty unless we take vigorous steps to create a basis that enables European companies to innovate.

There is often a feeling that the public is mismanaged. However, in a European context, German trains, French electricity and our own An Post show what can be done when we take a commercial approach to running public companies.

An efficiently run public competitor that seeks to maximize user performance rather than headline profits would allow others to grow and could help us close the innovation gap with our American and Chinese rivals.

We can encode European openness, innovation and standards in a truly public cloud. It takes courage and real investment.

The potential value is tremendous and there is no better time to start than now.

Luke Feeney is one of the founders of TerminusDB, an Irish data management startup. Given data security concerns, it’s time Europe built cloud services as a public utility

Fry Electronics Team

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