The U.S. National Security Agency hears everything. The NSA sees everything. It may even be true that the NSA smells everything. In any case, American spies scare German companies.
For that reason, many German executives get a nervous feeling when they entrust their company data to American information technology service providers. The California-based software giant Oracle is reacting to those fears with the announcement that it will open two new data centers, in Frankfurt and Munich, by the end of the year.
“Data security is an especially sensitive subject in Germany,” said Jürgen Kunz, senior vice president and managing director at Oracle Germany. The announcement, he said, signals “that Oracle, as a U.S. company, remains tied to the German market.”
“We support a European cloud.”
It is likely to become increasingly difficult for U.S. service providers to attract local customers without their own data centers in Germany, or at least, somewhere in the European Union. This is evident in a new report by the IT-based market research firm International Data Corporation (IDC), which recently surveyed the market for cloud-based services in Germany.
Cloud computing allows programming, data processing and data storage via the Internet. The survey showed more than half of the 200 companies contacted believe it’s important their data be stored in Germany. Whether or not the information is encrypted is not nearly as important to companies as where the information is stored.
Experts at the information technology research firm Gartner are convinced major international companies are losing more and more customers. “As a result, there is a move toward technologies, operating systems and hardware that are developed in the individual countries,” the market researchers wrote in a report.
Oracle isn’t going that far with its new data centers. The Silicon Valley-based firm continues to market its software worldwide. But the company wants to move closer to its customers with investments in Frankfurt and Munich. “There are customers who have the need to have their data stored in Germany and we want to meet this need,” Mr. Kunz said.
A particularly large number of computer centers are currently being built in Scandinavia.
Adding to the urgency of appealing to German companies is that Oracle’s largest competitor, SAP, is a German software company.
Other U.S. companies are also taking German concerns seriously. Google is spending €600 million ($761 million) over the next four years on a new computer center in the Netherlands, where the Internet technology firm already has a facility. And Hewlett-Packard, an American computer manufacturer, is discussing the creation of a “common cloud space” for Europe, similar in concept to the existing European Economic Area.
“We support a European cloud,” said Heiko Meyer, general manager and vice president of the enterprise group at Hewlett-Packard Germany.
Microsoft, on the other hand, is testing the waters for a German cloud service. There is a market among medium-sized companies for cloud services provided by a German computer center subject to the stricter German or European law and not American regulations, said Christian Illek, chief executive officer of Microsoft Germany, though no decisions have been made.
Data center operators view Germany with mixed feelings. A reliable power supply, a good legal system and pronounced data protection are positive points, according to a study by Bitkom, the German association for information technology representing some 2,200 businesses. “However, the above average cost of electricity in Germany is felt to be a liability,” Bitkom reported.
A particularly large number of computer centers are currently being built in Scandinavia. American companies are taking advantage of being in Europe, while at the same time enjoying cheaper power, thanks to the many hydroelectric plants and low year-round temperatures that render air conditioning mostly superfluous.
There is another country where data centers are booming: Russia. President Vladimir Putin has decreed that by next year, personal data on Russians held by global Internet companies must be stored within Russian borders.
The author covers the high-tech and IT sectors from Handelsblatt’s Munich office. To contact the author: email@example.com