Into the Clouds Release Takeaways

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Readers of this blog will know that the SIIA and Thomson Reuters-supported Atlantic Council study: Into the Clouds: European SMEs and the Digital Age” was released on October 10 at Aspen Berlin/Germany on October 10.  We followed up in Brussels on October 12 with a lively DIGITALEUROPE workshop and a well-attended Transatlantic Policy Network dinner.  In addition, I met with German and European Commission officials this week.  A few takeaways from these events and meetings follow. 

Cloud adoption rates are variable in Europe and surprisingly low in Germany.  Low adoption in Germany derives in part from continuing surveillance concerns but is perhaps equally caused by a preference for in-house solutions, even by SMEs.  Localization of data in-country remains a preference of many German companies and cloud providers increasingly provide that option to their customers who are evidently willing to pay a premium for that service.  

The Commission will propose early in 2017 a Directive or Regulation on the EU’s Free Flow of Data initiative, which pertains to non personal data flows within the EU.  The proposal will likely contain many exceptions, probably broader exceptions than those contained in standard trade law such as the GATS Article 14.  This is perhaps why the EU continues not to engage fully on data flow discussions in the Trade in Services Agreement (TISA) and Transatlantic Trade and Investment Partnership (TTIP) contexts.   One interlocutor told me that at least one important Member State wants an exception based on the “general interest,” which obviously could cover just about anything.  Such a provision would make it very difficult to come to an agreement in TISA and TTIP on data flows.  Moreover, given that the Commission will probably propose a Directive, each Member State will likely have different exceptions, thereby further limiting free data flows and the Digital Single Market vision.   The Commission also is beginning to internalize the fact that it is often difficult to differentiate between non personal and personal data, especially in the Internet of Things context.  This could further dilute the Commission’s Free Flow of Data proposal.

With respect to transatlantic digital relations, there is a lot of anticipation regarding what the next U.S. administration might do.  Given that both sides will likely hit the pause button on trade, the question is how to achieve meaningful progress on digital issues going forward.  There are many cross-cutting issues such as data flows, law enforcement access to data, competition, tax, privacy etc.  Ideally, the next administration will manage these issues at least somewhat holistically, not in silos.  While regulatory agencies need to continue to be independent, they should maintain and deepen transatlantic dialogues.  There is interest in Brussels in a high-level (higher than the U.S.-EU ICT Dialogue) U.S.-EU Digital Council as proposed by the Atlantic Council, perhaps modeled on the U.S.-EU Energy Council. 

Carl Carl Schonander is Senior Vice President for Global Public Policy.