Foreign Competitors Wield Patriot Act as Club Against U.S. Cloud Providers, Says Commerce Department Official
SILICON VALLEY -- The Patriot Act and U.S. trade embargoes are blocking promising opportunities for American cloud-services companies to grab business overseas, an official of the Commerce Department working to encourage small and midsized providers to venture abroad said Wednesday. “Our foreign competitors are really playing” up the point that U.S. companies are covered by the Patriot Act, which has “a very unfortunate name,” said Aileen Nandi, a commercial officer working out of San Jose, Calif., for the department’s Commercial Service. She said at the Cloud Slam conference that she hears foreign cloud providers making pitches at conferences that governments and companies outside the U.S. shouldn’t use U.S. vendors for that reason.
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"Data privacy is a huge, huge issue,” Nandi said. “It’s on everybody’s mind.” But “these challenges are more perceived than real,” she said. The government is working through the U.S.-EU Cloud Working Group and other channels to dispel myths and reach agreement, Nandi said. Contrary to misconceptions, “The U.S. government is not interested in routine business transactions” in its data collecting, and when it seeks information from a cloud provider in another country it goes through the same process it does for a paper file,” she said.
Commerce plans a roundtable in “the next couple months” for airing companies’ stories of the costs of complying with EU data-protection regulations, Nandi said. The information will dovetail with the U.S. negotiating position in relation to Europe that the rules impose “an enormous burden for a company,” she said.
It’s also difficult for a U.S. company to sell cloud services in a country like Syria, on which the U.S. has imposed an embargo, Nandi said. This is especially unfortunate from a business standpoint when foreign competitors’ governments haven’t followed suit, she said.
"The U.S. represents the largest cloud market in the world, of course, but the largest growth areas are outside the U.S.,” Nandi said. “If you're not looking overseas, your competitors are."
Nandi said most U.S companies she has worked with have looked to east Asia for opportunities, because they think of Europe as a more mature market. “The cloud market in Japan has a 50 percent growth rate” annually, partly spurred by the nuclear disaster, she said. But “we're starting to get a lot of requests” concerning places in Africa and Latin America, “and companies are starting to focus on those areas,” she said.