European data centres spy an opportunity in safe harbour ruling

08 Oct 2015 | News
With the EU’s highest court striking down the 15-year old agreement that allowed companies to store the personal data of Europeans in the US, new investment is poised to flow into data centres here

The end of the Safe Harbour agreement, which since 2000 stood as a cornerstone of data protection law between Europe and the US, has left more than 4,000 tech companies on both sides of the Atlantic dashing to overhaul their internet operations.

The benefactors of the European Court of Justice (ECJ) decision to annul the accord that allowed personal data to be shipped from Europe to the US include service providers that host clients’ physical internet operations on server farms, such as the one set up by Børge Granli.

Granli’s phone has been ringing more than usual this week with inquiries about capacity at his EcoDataCenter. The centre, which is currently under construction in the Swedish city of Falun, is pitching for companies to route their traffic to the data farm boasting the greenest credentials in the world.

“I’m happy,” said Granli. “The ruling is good for business. A lot of companies have been in touch, including all the big ones.”

The ECJ justified the decision to over-ride the Safe Harbour pact on the grounds that it violates the privacy rights of Europeans by exposing their personal data to possible surveillance by US intelligence agencies.

Shortly after the announcement, foreshadowed last month by a summary ruling, the US software firm NetSuite announced the opening of two new data centres in Europe, in Amsterdam and Dublin.

The EU centres will enable companies to store data physically in the EU, the company said. “This is especially significant given that the EU Court of Justice has just declared the EU-US Safe Harbour framework invalid.”

Another US company, Workday, announced it is expanding its data centre operations in Dublin.

A report by the Boston Consulting Group, written before the ECJ decision, predicted there will be more than 60 centres in western Europe in five years’ time.

Google, which already has a server farm in Belgium, is planning to open another data centre in the Netherlands next year, while Apple is planning to build facilities in Ireland and Denmark in 2017.

Meanwhile, Facebook’s arrival in Luleå, Sweden in 2011 was the starting point for a boom in the area, with KNC Miner setting up a centre from where the virtual currency Bitcoin is managed, and UK company Hydro66, also taking advantage of the cool climate and local hydroelectricity plant to establish a green and resilient data centre.   

Garry Connolly, president and founder of Host in Ireland, an industry-sponsored initiative to promote the country as a location for data centres, says the investment uptick demonstrates that the giant tech firms hedged their bets a while ago.

“The build-up of activity from Apple, Facebook and file transfer site Dropbox [which also has a Dublin base] gives you the sense that the [ECJ] decision did not come as a surprise,” he said.  

Regulators on both sides of the Atlantic are negotiating an updated Safe Harbour agreement, with an unclear timetable.

While it seems clear the ruling will result in increased investment in data centres in Europe, the large US technology companies claimed the overall effect is negative. “We expect that a suspension of Safe Harbour will negatively impact Europe’s economy, [and] hurt small and medium-size enterprises, and the consumers who use their services the most,” said Christian Borggreen, international policy director for the Computer & Communications Industry Association, which speaks on behalf of companies including Amazon, Facebook, Google and Microsoft.

Server farms are huge investments. Google, for example, states a figure of €800 million as the cost for its European centres. Apple’s two new computing facilities have been priced at €1.7 billion.

But Connolly said, “For the companies that do not want to design, build and operate their own facilities here, there are affordable co-location options,” listing providers including Amazon Web Services (AWS), Digital Realty, Rackspace, Equinix, Telecity and Interxion.

There are ways to transfer personal data permitted under EU law, which companies will now have to explore. For instance, AWS uses model contracts, approved by the EU, which impose obligations on both the exporter and the importer of the data to ensure that the transfer arrangements protect the rights and freedoms of the data subjects.

Greener data centres in Europe

When it comes to deciding where to store data, security is paramount. 

The source of energy is important too. With the tech sector coming under pressure over the environmental impact of high energy use, Granli thinks his ‘climate positive’ farm, which will redirect excess heat and energy to heat buildings in the district, can steal a march in the race for new clients.  

Facebook’s northerly Luleå site does away with expensive air-conditioning for cooling its servers. Instead, outside air is brought in to prevent overheating. However, noted Granli, hot air escapes back into the atmosphere. There is a similar effect at Google’s Finnish site, a renovated paper mill which uses chilly seawater from the Gulf of Finland, releasing back warmer water.

“Facebook is warming the birds, Google is warming the fish, we are warming the people,” said Granli.

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