Conflicting laws undercut global cloud's promise, study warns

A patchwork of conflicting laws and regulations threatens to undercut the full promise of the global cloud computing market, according to a Business Software Alliance study of 24 countries that account for 80 percent of the world’s IT and communications technology.

To capture the full economic potential of the cloud, governments need to better harmonize their policies to allow the flow of data across borders, the study states.

The BSA Global Cloud Scorecard ranks countries’ readiness to drive the growth of a globally integrated cloud marketplace. The study assesses laws and regulations in seven areas: data privacy, cybersecurity, cyber crime, intellectual property, technology interoperability and legal harmonization, free trade, and IT infrastructure. 

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The top five rankings for markets with the most robust cloud policies went to Japan, Australia, Germany, the United States and France. (The full list appears at the end of this story.)

“The Scorecard reveals that while developed nations are more 'cloud ready' than developing economies, troubling obstacles emerge when you examine the lack of alignment in the legal and regulatory environments in many of those advanced countries,” the study warns.

“A healthy national market for cloud computing does not necessarily translate into a market that is “in harmony” with the laws of other countries in a way that will allow for the smooth flow of data across borders. It is this kind of harmony that is needed to advance the growth of cloud computing at the level that will allow it to truly take advantage of its global efficiencies,” the study states.

“The true benefits of cloud computing come with scale,” said BSA President and CEO Robert Holleyman. “In a global economy, you should be able to get the technology you need for personal or business use from cloud providers located anywhere in the world. But that requires laws and regulations that let data flow easily across borders. Right now, too many countries have too many different rules standing in the way of the kind of trade in digital services we really need.”

The score card finds that there are two worlds when it comes to cloud preparedness: Advanced economies such as Japan — the score card’s top finisher — have laws and regulations that promise to support the development of cloud computing. Less-developed economies, such as last-place finisher Brazil, face several challenges when it comes to fully capitalizing on the economic benefits of the cloud, the study states.

Countries on both sides must be vigilant not to take steps that would hurt their chances of cultivating the cloud market. Many countries plan new laws that will help them advance in the digital economy, such as Mexico’s new privacy law, according to the study. Others — such as the proposed Data Protection Regulation in the European Union, which has the potential to undermine its benefits with new, overly prescriptive rules — threaten to undermine the economic advances that a truly global cloud can provide, according to the study.

Those interested in advancing cloud computing can find a model in Japan, which has a comprehensive suite of modern laws that support and facilitate the digital economy and cloud computing, including “comprehensive privacy legislation that avoids burdens on data transfers and data controllers [and] a full range of criminal and IP law protections," the study states.

“To have a global cloud market, we don’t need every country’s laws to be identical," Holleyman said. "But we do need them to be compatible. Privacy and security rules are especially important. They should promote good data stewardship while also encouraging international commerce."

BSA proposes a seven-point policy blueprint for governments around the world to expand economic opportunity in the cloud:

1. Protect users’ privacy while enabling the free flow of data and commerce.
2. Promote cutting-edge cybersecurity practices without requiring the use of specific technologies.
3. Battle cyber crime with meaningful deterrence and clear causes of action against criminals.
4. Provide robust protection and vigorous enforcement against misappropriation and infringement of cloud technologies.
5. Encourage openness and interoperability between cloud providers and solutions.
6. Promote free trade by lowering barriers and eliminating preferences for particular products or companies.
7. Provide incentives for the private sector to invest in broadband infrastructure, and promote universal access to it among citizens.

The score card’s full rankings, with each country’s total score from the seven criteria, are as follows:

1. Japan, 83.3
2. Australia, 79.2
3. Germany, 79.0
4. United States, 78.6
5. France, 78.4
6. Italy, 76.6
7. United Kingdom, 76.6
8. South Korea, 76.0
9. Spain, 73.9
10. Singapore, 72.2
11. Poland, 70.7
12. Canada, 70.4
13. Malaysia, 59.2
14. Mexico, 56.4
15. Argentina, 55.1
    
16. Russia, 52.3
    
17. Turkey, 52.1
18. South Africa, 50.4
19. India, 50.0
20. Indonesia, 49.7
21. China, 47.5
22. Thailand, 42.6
23. Vietnam, 39.5
24. Brazil, 35.1