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Data Sovereignty

Serviceteam IT UK Cloud Snapshot Survey 2017

In the five months since the research undertaken by Serviceteam IT, which explored the impact of the external challenges that businesses face in 2017 and beyond, the uncertainly has not changed. The uncertainty of Brexit, the introduction of General Data Protection Regulation (GDPR), and the rise of cyber-crime, and most importantly Data Sovereignty.

Where are your cloud services and data centres?

Over two thirds (69%) of the companies surveyed had data centres in two or more countries. 71% of the companies have data centres within the UK. These include hosting in house and third-party data centres. Nearly two thirds (63%) hosting in Europe with 32% hosting in Ireland.

The location of the data centre is still largely dictated by the speed of traffic back to the users and Ireland has offered local options for UK businesses before Amazon, Microsoft and Google opened up UK data centres. 26% of companies said they used North American data centres and 2% said they used data centres in Asia Pacific.

69% have data centres in two or more countries

United Kingdom: 71%
Europe: 63%
Ireland: 32%
North America: 26%
Asia: 2%

Where are your cloud services hosted?

43 % of all large EU digital companies are started in the UK

75% of the UK’s cross-border data flows are with EU countries

“Estimates suggest that around 43 % of all large EU digital companies are started in the UK, and that 75% of the UK’s cross-border data flows are with EU countries. Analysis indicates that the UK has the largest internet economy as average of GDP of all the G20 countries …

Any disruption in cross-border data flows would, therefore, be economically costly to both the UK and the EU. Taking EU-US data flows as a comparator, external estimates suggest that if cross-border data flows between the EU and the US were seriously disrupted, the EU’s GDP could reduce by between 0.8 and 1.3 %. Therefore, placing restrictions on cross-border data flows could harm both the economies of the countries implementing these policies, as well as others in the global economy…

As well as ensuring that data flows between the UK and the EU can continue freely, the UK also wants to make sure that flows of data between the UK and third countries with existing EU adequacy decisions can continue on the same basis after the UK’s withdrawal, given such transfers could conceivably include EU data.

The UK is, and will remain  after the point of withdrawal, a safe destination for personal data with some of the strongest domestic data protection standards in the world. For this reason, the UK does not see any reason for existing data flows from third countries to the UK to be interrupted. The UK will liaise with those third countries to ensure that existing arrangements will be transitioned over at the point of exit…”

Will data sovereignty be an issue as a result of Brexit?

The issue of data location will become more relevant after Brexit. While initially, we will continue to host in Europe it is very possible that the UK adopts a German style data hosting policy regulated by the Federal Data Protection Act which is more stringent than the European wide laws. While companies can host elsewhere it is easier to comply by hosting in Germany, boosting German digital economy.

The companies were asked if they felt that Brexit would introduce data sovereignty issues. Just over a third (37%) said no. 21% said they believed that it would cause data sovereignty issues but the largest group 42% were unsure. Again, this is another example of the uncertainty around Brexit and its knock-on effects to IT operations and planning. However, in the Governments Position paper published at the end of August, it is indicated that the intention would be to maintain the current arrangements.

42% are unsure if Brexit would introduce data sovereignty issues or not

Yes: 21%
NO: 37%
Unsure: 42%

Do you believe that there will be a data sovereignty issue as a result of Brexit that may require you hosting all relevant services in the UK?

The large providers are however securing their position no matter what happens. Amazon, Microsoft and Google have all opened UK facilities. Amazon opened its first of five UK data centres in London in December 2016. Microsoft who have data centres in Cardiff and London have used these to secure government contracts such as providing Parliament with Office 365 and the Metropolitan Police. And while it has been reported that a big factor in the move to the UK for Google was being able to offer customers assurances over data sovereignty when Brexit finally happens, Google denied this. The spokesman said the decision to open the “region” was not caused by the Brexit vote to leave the EU in June 2016 because it “had been taken well before the Brexit vote”.

The opening of UK based data centres by Amazon, Google and Microsoft will allow some additional workloads to be moved. These data centres address the issues of data sovereignty which is predicted to become more significant over the next four years.