12 Nov 2015   |   News   |   Update from Microsoft
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End of transatlantic data pact pulls more data centres into Europe

Microsoft is following Amazon and a string of other US companies in announcing new investments in European data centres following the scrapping of the Safe Harbour data pact between the EU and US

Microsoft has joined the roll call of US technology companies scrambling to deal with the end of the EU/US pact on data transfer, unveiling plans to build two data storage centres in the UK next year.

The investment, announced by Microsoft CEO Satya Nadella at a meeting in London on Tuesday, followed days after Amazon said it was to open a data centre in the UK in 2016, adding to its existing centres in Ireland and Germany.

The announcements follow the European Court of Justice’s decision in early October to invalidate the 15-year-old Safe Harbour agreement, under which US companies could self-certify that they would handle customer information stored in US repositories in compliance with EU rules.

The Court said the agreement violates the privacy rights of Europeans by exposing their personal data to possible surveillance by US intelligence agencies. While it remains possible to agree individual contracts with European customers to allow their information to be processed in the US, these are seen as adding an unwieldy layer of bureaucracy.

US and EU officials are negotiating a new Safe Harbour treaty. However, even before the scrapping of the EU/US pact many potential customers in Europe, such as governments and healthcare systems, stipulated data must be stored and processed in centres within national boundaries.

This is an incentive for US companies to build European facilities and the opening of two centres in the UK creates capacity for Microsoft to start bidding to provide cloud-based services for the public sector. Having local data centres will also overcome the issue of the latency that occurs when using US-based storage and processing from Europe, which has deterred businesses from moving to cloud computing services.  

Microsoft also said it will expand its Dublin-based data centre, which opened in 2009.

Further big investments from US tech giants include Google’s plans to open a centre in the Netherlands in 2016, to add to an existing facility in Belgium, and Apple’s plan to build facilities in Ireland and Denmark in 2017.

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