On its website, ProfitBricks touts what it calls “100 percent German data protection,” underneath the black, red, and gold colors of the German flag. “Having a German cloud helps tremendously,” says Markus Schaffrin, an IT security expert at Eco, a lobbying group for Internet companies. “Germany has some of the most stringent data-protection laws, and cloud-service providers with domestic data centers are of course highlighting that.”
The companies known as the Mittelstand—the small and midsize enterprises that form the backbone of the German economy—are rapidly embracing the idea of the networked factory. Yet they remain wary of entrusting intellectual property to a cloud controlled by global technology behemoths and possibly subject to government snooping. “Small and medium enterprises are afraid that those monsters we sometimes call Internet companies will suck out the brain of innovation,” says Joe Kaeser, chief executive officer of Siemens, which in March began offering cloud services using a network managed by German software powerhouse SAP.
In a case being closely watched in Germany, the U.S. Department of Justice has demanded that Microsoft hand over e-mails stored on a data server in Ireland. The software maker argues that the U.S. has no jurisdiction there; the U.S. government says it does, because Microsoft is an American company. …
U.S. companies aren’t ceding the market. Microsoft will offer its Azure public cloud infrastructure in German data centers, with T-Systems acting as a trustee of customer data. The companies say the arrangement will keep information away from non-German authorities. And IBM in December opened a research and sales hub for Watson, its cloud-based cognitive computing platform, in Munich—a move intended to reassure Mittelstand buyers about the security of their data. “If a customer wants data never to leave Bavaria, then it won’t,” says Harriet Green, IBM’s general manager for Watson. “I’m being invited in by many, many customers in Germany, because fear about security is very, very real.”
Excerpts from Building a National Fortress in the Cloud, Bloomberg, May 19, 2016