Following its statement on the plan to set up a separate entity in the United States, the Amsterdam Internet Exchange (AMS-IX) now announces that a structure for this new US entity has been chosen. To protect its Dutch entity from US legislation, the new entity will not physically be connected to the exchange platform in Amsterdam.
As one of the largest truly open Internet Exchanges in the world, the Amsterdam-based AMS-IX earlier this month revealed its plans to expand the organization and its peering platform into the United States. Now, the AMS-IX, in cooperation with global law firm Jones Day, has decided to create a new US entity that is legally fully separated from its Dutch counterpart.
Effects USA Patriot Act
The US Inc. will be a wholly-owned subsidiary of Dutch AMS-IX BV, whereby the two companies act independently from each other. AMS-IX BV will act solely as a shareholder. Such a structure would ensure that the US Inc. will not have possession, custody or control over AMS-IX BV’s data or equipment. Moreover, as US legislation such as the USA Patriot Act does not apply to foreign companies outside US jurisdiction, the USA Patriot Act should not apply to the AMS-IX BV or AMS-IX Association.
The new US entity is meant to enable deployment of Internet exchanges in the US as stand-alone IXs. The AMS-IX BV will have several operating agreements with the US Inc. that define the operational framework within which the entity can act, as well as license the applicable intellectual property.
London Internet Exchange (LINX)
To guard against potential future changes in US law – with for example an extraterritorial effect of the USA Patriot Act, an independent Dutch orphan foundation can be formed at any time. If needed, this Dutch orphan foundation could be invoked and created in one week to protect the Dutch infrastructure and assets. This means that the US Inc. can then be moved outside the Dutch AMS-IX structure, and the corporate link between the US Inc. and AMS-IX BV would be severed. AMS-IX’s reason for not selecting this structure in the first place is that an independent orphan foundation does not allow for the intended economy of scale of the organization.
Last August, also the London Internet Exchange (LINX), another large open Internet Exchange, revealed plans to expand its presence into the United States. LINX USA, as the new Internet Exchange is called, will be run by London Internet Exchange (LINX) and be closely modeled after their Exchange in London.