‘Cloud protectionism’? How about ‘consumer choice’?



The following opinionated article was originally published on the website of OzHub, an industry coalition which aims to build Australian consumer and business confidence in cloud computing. OzHub members are Macquarie Telecom, Fujitsu, VMware, Infoplex, Alcatel Lucent and F5. The article is by Matt Healy, OzHub chairman and Macquarie Telecom national executive — regulatory and government.

It was published as a response to this article by US Ambassador to Australia Jeffrey Bleich, who argued that Australians are practising “cloud protectionism” in seeking to have on-shore datacentres.

opinion Jeffrey Bleich hits the nail right on the head in the first sentence of his opinion piece on cloud computing when he says people are putting huge amounts of data into the cloud, whether they know it or not.

The reality is, a huge proportion of Australians do not know they are using the cloud when they use services such as social networking, and do not know that much of their personal data is being stored overseas as a result. When they find out, they are not happy about it.

OzHub last year polled 1500 people and found about three quarters used online services that stored their personal data overseas. A similar proportion said they would prefer that this data was kept in Australia. This is not protectionism. This is consumers wanting to be able to exercise choice.

It is a false analogy to define the issue as being analogous to people wanting to keep their money under the mattress when it could be in the safety of a bank. It’s actually a little bit insulting of the intelligence of those who have argued that it matters where data is stored.

It would be a better analogy to say that people would rather invest their money in Australian banks where they are be able to avail themselves of Australian laws if things go pear shaped. They might not know exactly what those laws are, or who would be the appropriate regulator, but they have more confidence in being able to find out who to complain to and that there will be laws that protect them.

That they instinctively feel the same about how their private data should be treated is hardly a revelation and certainly is not a threat to the future success of the information age. Quite the contrary, it is consumer confidence in being able to exercise choice that will underpin the community’s acceptance of these exciting new technologies. Or, to put it another way, it will be shocks to that confidence in the form of lost and stolen data without adequate redress that causes people to shy away from the cloud.

Australia has, for example, just passed some of the most comprehensive privacy laws in the world after five years of careful consideration and an exhaustive legislative examination of the issues. But will the Australian Privacy Commissioner be able to assure an Australian consumer that they will be able to exercise any rights of redress if their data is being stored in, for example, India?

The ability to know when your private data has been accessed by someone – legally or otherwise – is also clearly something people instinctively and properly feel they should know about. Interestingly, this is exactly why many people feel that they need a choice about whether they place their data with a US-owned cloud service provider.

A piece of legislation called the Patriot Act empowers the US Government to demand that US companies secretly hand over private data belonging to anyone, without ever telling that person. This is a law that has been objected to by European Governments who have passed their own laws to outlaw this practice. No one, of course, will necessarily ever know if US companies are secretly handing over data demanded of them by the Patriot Act!

So, the US Ambassador colourful use of the term “cloud protectionism” seems to rather oversimplify an issue that is quite a bit more complex. While the ability of data to flow seamlessly around the world is undoubtedly to the good, the inability of people’s rights over their own data to move as easily is not so wonderful.

The answer, of course, is very simple. People should be informed about where their data is going and be given the ability to exercise choice. And those who hold private data and want to exercise those choices on people’s behalf – especially governments – should be sure to take a conservative approach and not risk sending it beyond the control of Australian law if there is a risk of something bad happening. That’s not protectionism. That respect for people’s rights.


  1. This is a point I make when talking about online storage. Its a double edged sword where we pay for the convenience it offers. Its not just limited to the Patriot Act, thats just the poster child, but it shows what issues there are around cloud storage in general.

    Megaupload is probably the best example. Agree or disagree with Kim Dotcom’s morality or legal position, the laws being used to take his company down show just how open our data is to foreign laws. There are numerous other examples, but his is the highest profile.

    These are issues that will affect us all. Moreso as Governments around the world hastily implement Internet control laws over the next few years, where their draconian nature only bleeds our rights globally.

    • Megaupload was really a different beast though, it was really just a file dumping ground than anything else, and the only people running a business from it was Megaupload themselves.

      Take other cloud type sites like Facebook, Google, Amazon, etc, and it isn’t just the owner of the cloud who has a vested interested, many other companies run and operate their own business on top of them. It would be near impossible for one of these cloud services to be taken fully offline due to the illegal activities of a single user(s). Rather it would just be those user(s) who are taken down.

  2. “polled 1500 people and found about three quarters used online services that stored their personal data overseas”
    I read that as ‘about one quarter didn’t realise what services they were using which stored their personal data, and where’.

  3. The US ambassador is deliberately ignoring his own government’s threats to information privacy. If your information is stored in the US, it is accessible by a range of different authorities without need for court order or oversight.

    That is why people don’t use the US as their first choice cloud storage provider. We value privacy – the US (or at least, its government) does not.

    Of course, if the US fixes (I say fix rather than change, because the laws are an abomination) its laws to ensure data privacy then people may choose to store their data there.

    Oh, and don’t forget MegaUpload’s trouble came in part from using US servers. Where else would a government be able to steal private citizens’ data, refuse to return it and claim to be the “leader of the free world”?

    Sorry Mr Ambassador, but to the extent possible I would prefer to keep my data out of your reach.

    • “Where else would a government be able to steal private citizens’ data, refuse to return it and claim to be the “leader of the free world”?” — I liken it to stopping a commuter train that services 10,000 people, just because 1 person didnt have a valid ticket.

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