Protectionist policies, such as recently adopted German retrictions on public sector cloud use, can ultimately translate into a threat for the open and global structure of the Internet, argues Daniel Castro, Vice President of the Information Technology and Innovation Foundation and Director of the Center for Data Innovation
The Digital Post: Newly adopted German rules for government cloud computing means official data can only be processed in Germany. What is your opinion?
Daniel Castro: This is an unfortunate development, both for Germany and for others. First, countries like Germany should be an ally in support of free trade, and by enacting these types of non-tariff barriers to trade it gives cover to other countries who want to enact protectionist measures.
Second, by restricting access to foreign cloud providers, Germany is “cutting off its nose to spite its face.” Germany organizations benefit from having access to the best cloud providers, and many of these are foreign companies. This will raise costs and decrease productivity for affected organizations.
Third, there is little real benefit in terms of privacy and security to storing data within the country versus abroad. Countries should be working to clarify any distinctions. This is one reason my think tank has called for a “Geneva Convention on the Status of Data” to determine when government agencies can lawfully request access to data.
Most developed countries should be able to agree to common standards and abide by them. The end goal should be a data free trade zone that extends globally.
The Digital Post: Ever since the Snowden revelations came out, German PM Angela Merkel has been advocating for a separate European communication network/infrastructure. What might be the implications of such project, if it ever is implemented?
Daniel Castro: United States and Europe are allies on many issues, and it would be counterproductive to build separate infrastructure rather than working together towards a common goal.
Neither wants the other to spy on them, so they should be able to come to terms to upgrade the infrastructure we already share.
The greater threat to both U.S. and German interests are from China, so there is an opportunity to put aside past issues and come together to confront a looming issue.
The Digital Post: You often speak about the rise of “data nationalism” across the world. What is this phenomenon about?
Daniel Castro: Many countries are trying to pass laws and regulations to keep data within their borders, such as by requiring data to be processed locally. One reason countries are doing this is because they believe it will help create jobs, such as construction jobs for data centers.
But the net impact is very negative, as it raises the cost of doing business for the rest of the economy, and many businesses are increasingly dependent on cloud infrastructure. Moreover, some rules limit cross-border data flows which means a multinational company will run into serious issues as it tries to operate on a global scale.
The Digital Post: Is data nationalism a threat to the current structure and functioning of the Internet? Why?
Daniel Castro: Yes. The primary benefit of the Internet is that it is a global, open network available to all. Protectionist policies can chip away at this ideal until we are eventually left with a series of disjointed national or regional Internets.
Policymakers should be very concerned about overreacting to short-term fears about data privacy at the expense of damaging the potential growth of data-driven innovation in the Internet economy.