White noise: cloud computing in the EU

11 November 2012

There is much at stake for European economics and employment. Neelie Kroes, European Commission vice-president responsible for the digital agenda for Europe, explains to CEO why she is talking up the considerable potential of cloud computing.

The European Commission wants Europe to play a decisive role in the development of cloud computing. By 2020, this fast-growing phenomenon could deliver a net gain of 2.5 million new jobs in Europe and an annual boost of €160bn to EU GDP (around 1%), according to a Communication adopted by the the Commission on 27 September.

The strategy paper, entitled 'Unleashing the potential of cloud computing in Europe', calls for the speeding up and increasing use of these digital platforms in Europe. Neelie Kroes, vice-president responsible for the Commission's digital agenda, explains:

"Cloud computing is a game-changer for our economy. Without EU action, we will stay stuck in national fortresses and lose tens of billions in economic gains. We must achieve critical mass and a single set of rules across Europe. And we must tackle the perceived risks of cloud computing head-on.

"By 2020, cloud computing could deliver a net gain of 2.5 million new jobs in Europe."

"Today, in the absence of common standards and clear contracts, many potential users are deterred from adopting cloud solutions. They are not sure what standards and certificates they should look for to meet their requirements, or whether their data is safe. They might decide to change providers but find they can't transfer their songs or data. At the same time, cloud providers want to ensure that their own or their customers' data is safe and to know what their obligations are."

Cloud computing, in simplified terms, is the storing, processing and use of data on remotely located computers accessed over the internet. This means that users can order-up unlimited computing power on-demand, not have to make major capital investments to fulfil their computing needs, and can access their data from anywhere with an internet connection.

Surveys show that 81% of businesses already using the cloud reported 10-20% lower IT costs, while 20% of them reported savings of up to 30% or more. And cloud computing also brings large gains to the public sector, by making it easier to provide integrated, effective, lower-cost services.

Perfect storm in a cloud

Cloud computing emerged as a popular digital tool after the dot-com bubble burst in the early 2000s. Companies wanted to run their computer networks more efficiently and realised that they were often using as little as 10% of their capacity at any one time. New cloud architecture resulted in significant internal efficiency improvements. Among consumers, cloud-like computing is already popular with services such as Facebook, Spotify and web-based e-mail, but the real economic benefits come through widespread use of cloud solutions by businesses.

"81% of businesses already using the cloud reported 10-20% lower IT costs, while 20% of them reported savings of up to 30%."

Several EU member states are developing their own national cloud initiatives such as Andromède in France, G-Cloud in the UK and Trusted Cloud in Germany. But with the EU public sector market fragmented, its requirements have little impact, integration of services is low and citizens do not get the best value for money.

The new Commission strategy, along with the European strategy for internet security, is aimed at fostering a cloud-friendly legal environment for the development of cloud services. Moreover, it should help by promoting a rapid adoption of common standards, by harnessing public spending and by supporting research and innovation, much like what the EU did for the development of mobile telephony.

Key actions of the strategy include cutting through the jungle of technical standards so that cloud users get interoperability, data portability, and reversibility. Support for EU-wide certification schemes for trustworthy cloud providers is an issue, as well as the development of 'safe and fair' model contracts for cloud computing services.

A European cloud partnership between member states and industry is also foreseen to harness the public sector's buying power (20% of all IT spending), shape the European cloud market and boost the chances for European cloud providers to grow to a competitive scale and deliver cheaper and better e-government.

"The development of such European cloud rules is a precondition for the seamless digital space that will bring us a true digital single market," Kroes says. "Together these actions form a comprehensive effort to deliver a dynamic and trusted internet environment in Europe."

Cloud security risks

The EU's cloud computing communication comes ahead of regulation on cyber security to be proposed in the coming months. Security risks in the cloud do not necessarily differ much technically from risks encountered outside the cloud. However, in the cloud, the risks can quickly and easily amplify, which increases the effects on multiple clients simultaneously.

"The real economic benefits come through widespread use of cloud solutions by businesses."

Cloud-specific security risks relate to the multi-tenancy and shared-resources characteristics of cloud computing. In the cloud, the client cedes control of security to the service provider, thus making it more difficult to assess whether the cloud service provider complies sufficiently with security requirements.

As the EU Communication explains, the new cloud computing strategy does not foresee the building of a European super-cloud - a dedicated hardware infrastructure to provide generic cloud computing services to public sector users across Europe. However, one of the aims is to have publicly available cloud offerings that meet European standards not only in regulatory terms, but in terms of being competitive, open and secure. This does not preclude public authorities from setting up dedicated private clouds, so long as they conform to regulatory obligations.


Europe is to play a decisive role in the development of cloud computing.
Neelie Kroes is vice-president responsible for the digital agenda of the European Commission for Europe. During 1982–89, she served as minister for transport, public works and telecommunication in the Netherlands, and during 2004–09, she worked for the Commission as competition commissioner.