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Is Data Localization a Threat to Privacy or the Cloud?

01.28.14

Laws which require that all company and personal data be stored in their native country are opposed by Google, and other major Internet businesses since they claim that these type of laws hurt rather than help businesses and individuals. The New York Times reported that in November 2013 that Richard Salgado (Google’s director of law enforcement and information security) testified before the US Congress in the wake of disclosures about US government collection of data from world-wide sources a number of countries were considering “data localization” laws:

If data localization and other efforts are successful, then what we will face is the effective Balkanization of the Internet and the creation of a ‘splinternet’ broken up into smaller national and regional pieces, with barriers around each of the splintered Internets to replace the global Internet we know today…

Forrester estimated that data localization laws would dramatically change the way cloud companies (including Google, Amazon, Yahoo!, and Microsoft) conduct business and what countries they store data to optimize their cloud operations:

In the next three years, the cloud computing industry could lose $180 billion, 25 percent of its revenue, because of such defections.

Since the privacy laws vary so widely around the world, if data localization laws are adopted the impact may be significant to businesses world-wide.

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