“If we want our ecosystem to be sustainable, it has to be sovereign”. These were French president Emmanuel Macron’s closing words to an audience of start-ups at a September tech conference in the Elysée palace, Paris. Mr Macron, no stranger to touting Europe’s need to flex its independence, used his speech to highlight an emerging geopolitical fault line — cloud computing. Europe has lost the battle over the technology but shouldn’t give up, he said. Why? The continent cannot rely “on any non-European power” for its data security.

The idea of cloud computing having anything to do with geopolitics may strike some as strange. After all, we associate it with storing holiday photos or streaming television programmes and music. The language surrounding its use hasn’t helped. A cloud denotes something weightless, harmless, even ephemeral.

But the cloud has taken an unrivalled foothold in our modern lives. It is central to the growing data economy and much of the digitalisation boom. Both private business and governments increasingly rely on cloud providers for everything from running world wide video conferencing to managing sensitive intelligence data. The cloud is now intertwined with a country’s politics and economics but exists in a space where opportunities for friction over issues of control, regulation, jurisdiction and power are only increasing. The cloud is embedded into geopolitics, whether it likes it or not.

At its simplest the cloud is about providing remote services and resources like storage, hosting and analytics via the internet. It’s made possible by huge amount of physical infrastructure like data centres, cooling systems, satellites, cables and telephone lines.

It’s also a billion dollar industry. According to analysts at Morgan Stanley, 15 per cent of the $1.56tn spent on IT last year was on cloud technology. In 2015 it was seven per cent. A massive growth sector before the pandemic, Covid-19 has pushed it into overdrive as companies and services look to move online. At the end of April Microsoft Chief Executive Satya Nadella said the virus had allowed for two years’ worth of digital transformation in two months.

The United States and China dominate the cloud market. Amazon, Google and Microsoft hoover up 60 per cent of it, while China will spend $28bn over the next three years in an effort to catch up. A race between companies from both countries to muscle in on demand-hungry South East Asia is well underway.

This has worried European policymakers and is the source of Mr Macron’s call to arms. A fear of falling behind and the privacy implications of relying on foreign ‘big tech’ in an ever more online world has pushed the European Commission into making EU digital sovereignty a key ambition. Gaia-X is one of the showpieces. Launched in June, the initiative hopes to bring together companies to offer a sort-of alternative decentralised European cloud platform for users to access. On the same day as Mr Macron’s speech at the Elysée palace the first partnership — one between Germany’s Deutsche Telekom and France’s OVHcloud — was announced.

Whether the project takes off remains to be seen. Some critics worry about its transparency and complexity. Others aren’t convinced there’s enough of a domestic market for it to wield much influence. Big cloud providers won’t give up easily. Their success so far is based on attractive packages and good service.

Whatever happens we are witnessing the emergence of new data spheres. For good or for ill, countries increasingly want to set out their own digital borders. Cloud geopolitics are here to stay.

Published September 2020

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