Artmotion Ltd., a privately held data hosting provider based in Switzerland, released a statement saying the U.S. cloud industry stands to lose more than $10 billion by 2020 as a result of American President Donald Trump’s “increasingly shaky reputation on data privacy.”
Artmotion took it upon itself to base its statement on research. The company found the growth of U.S. cloud providers slowing; citing IDC’s Worldwide Public Cloud Services Spending Guide. That research found the U.S. will generate more than 60 per cent of total worldwide cloud revenues by 2020. Compared to previous results, this means the U.S. is experiencing slower cloud growth across the other eight regions IDC tracks. The other regions are: Canada, Japan, Western Europe, Central and Eastern Europe, Middle East and Africa, Latin America, and Asia/Pacific.
As of January, the worldwide spending on public cloud services and infrastructure is forecasted by IDC to reach $160 billion this year; that’s an increase of more than 23 per cent over 2017. And, the U.S. will still be the largest market accounting for 60 per cent of the cloud spend. The fastest growing country is China with a five-year growth rate of 43.2 per cent.
How does Canada compare? Canada is growing, and it’s expected to surpass the $5 billion mark by 2020 which is close to doubling from 2016 levels.
But Artmotion added that the slowdown does not factor in the effect that President Trump’s record on data privacy has had on business confidence in the U.S. as a data hosting location. Again, Artmotion cited another study; this one by the Pew Research Center in Washington, D.C., where just 22 per cent of people have confidence in President Trump to do the right thing when it comes to international affairs.
Based on this research, Artmotion is suggesting that U.S. cloud providers will experience further slowing of growth in the next three years – creating estimated losses of $10.1 billion for the industry between 2017-2020.
Mateo Meier, CEO of Artmotion, said in a market that is still expected to grow significantly in the next few years, it is vital that U.S. service providers continue to attract new customers in order to retain market share. Despite the U.S.’s current dominance of the global cloud computing market, there is no certainty that the status quo will be maintained.
The president of cloud provider OVH, Russ Reeder, who is based in the U.S., said the slowing does hurt U.S. providers and could lead to market growth for OVH who is based in France. OVH two years ago made the decision to open one of its top four cloud facilities in the province of Quebec.
How does this all play in the Canadian market? David Latulippe, the co-founder and vice president of Quebec-based IT Cloud Solutions told EChannelNews the Patriot act, which allows U.S authorities the ability to search and seize company records, has many companies taking notice and preferring to keep their records in places where the Act has less reach. “Canada is a good example,” Latulippe said.
Reeder said Canada would have a competitive advantage over American cloud providers mainly because the data privacy laws are restrictive.
Latulippe also believes that data privacy is a big concern for many companies.
“If the laws are such that authorities can have direct or indirect access to certain company records, many companies will try to find ways to better protect their data. This might mean using data centres outside the reach of U.S. authorities.
IT Cloud Solutions, a cloud service provider that was established in 2005, has a personal information protection policy guide that it updates frequently. The ITCloud protection guide ensures the confidentiality of the personal information provided to the cloud provider during the course of business. This includes standards for collecting, using, disclosing and storing personal information data. The company has also gone so far as to show customers how they safeguard data.
Reeder said the restrictions at American cloud-based companies positioned OVH well since they are a cloud provider outside the U.S. and China.
But there could be another reason for the slowdown in U.S. cloud, he added. The slowdown in the U.S. cloud market may be occurring because the main influx of cloud adoption in the country already took place.
Reeder said businesses may be taking a pause to sort out the opportunities with containers and bare metal. And, he would not be surprised if there is an uptick in the future in the U.S. market.