Cloud Hosting with Borders, China vs. The United States

OPINION – Politics govern many aspects of life and the cloud computing industry is no different. There are a few countries whose laws and politics are creating a barrier making it difficult for their cloud hosting companies to expand. We are going to take a look at the two premier economies in the world: China and the United States.

Author: Dylan Israel, Computer Science major student at California State University, Los Angeles, and a regular contributor to hosting provider QuadraNet’s blog (blog.quadranet.com).

Even though both nations maintain massive economies (2nd and 1st, respectively), they are still subject to potential losses in GDP due to politics within their own borders. Countries’ politics don’t only play a role in the future of cloud computing domestically, but internationally as well. China, although it doesn’t yet have a huge market share of the cloud computing industry, isn’t doing itself any favors with its politics in its attempt to create one. Conversely, America, although it maintains a massive and dominant market share in the cloud hosting industry, has declined some and created concerns for consumers due to its own political fall-out.

“Great Firewall of China”

The business strategy of cloud hosting companies, at its core, relies on fast and dependable internet. The Chinese government’s policies make it considerably harder for foreign cloud hosting companies to compete with their domestic counterparts. Some international companies due to Project Golden Shield, better known as the “Great Firewall of China”, has made it impossible for some cloud-based programs to even be used by the public (the most notable one being Google Apps).

The extra step of being evaluated by China’s firewall adds to a process that in other countries isn’t necessary. This naturally will cause lag time and will take away from the bottom line while also discouraging investment. China has widely been criticized for their internet policing. Typically, the bulk of policing on the internet focuses on anti-government views, and specifically for China, anything that highlights sentiment contrary to the Communist party. Because of Project Golden Shield, even small international sales to China can come under significant scrutiny. Cisco sold $100,000 dollars worth of routers for Project Golden Shield in 2008. For Cisco, this sale is just a drop in the bucket, but it got significant media attention because of the routers’ intended use. When a company’s day-to-day operations must be open to the public, it’s only reasonable to assume future investments may be limited. However, it does leave only domestic companies with a chance to succeed, which in the short run isn’t necessarily bad for China.

U.S. NSA Spy Program

Often it is much easier to criticize a foreign country for lack of transparency. Yet, in my opinion, China is very transparent – it’s fairly well-known what and how they police content on the internet. In the United States, the very opposite is often true. It seems like every few months we hear about a new National Security Agency spy program. The U.S.’s Prism Project, for example, is a massive surveillance data mining program that became known to the public in 2013. The American government is often perceived internationally as hypocrites in regards to spying on other countries and citizens. At least with the Chinese government, one could argue that it’s much more out in the open.

The Information Technology and Innovation Foundation surveyed non-American companies who used American cloud companies and found that 10% of those companies cancelled a project after the Prism Project or other similar surveillance efforts that have been made public. Furthermore, 56% of foreign companies would be “less likely” to use an American cloud computing company in the future, citing that they couldn’t be trusted. Nothing has changed technologically, but the lack of transparency and trust is broken to the point where American politics is now affecting the cloud based industry.

Cloud investments Europe

An Informa Cloud World Global Insight survey shows that North America is responsible for about 70% of the cloud computing market share and innovation. With its political stance, China has effectively isolated itself, preventing it becoming a major player in the international cloud market. That doesn’t, however, mean that America is without competition. America’s market share is quite large, even if it has lost some steam due to NSA leaks causing an atmosphere of distrust. After all, if you can’t trust the United States government, then you probably can’t trust cloud hosting companies in the United States either.

This sentiment is especially true for European countries, most of which are trying to play catch-up by investing millions upon millions into cloud computing. It is unclear if the American market share will continue to decline while Asian or European companies will take advantage, but one thing is certain – no matter what country comes out with the best cloud technology, if it can’t be trusted it won’t be used.

About QuadraNet, Dylan Israel

quadranet-dylan-israel
Dylan Israel, Computer Science major student at California State University, Los Angeles, and a regular contributor to the QuadraNet Blog.

Headquartered in Los Angeles, QuadraNet has been offering hosting and data center solutions since 2001. Offering solutions from dedicated servers to colocation, cloud servers and multi suite custom enterprise-level datacenters, QuadraNet has hosting solutions available for a variety of business needs. Dylan Israel is a Computer Science major with an interest in gaming, gadgets, and networking. He is a regular contributor to the QuadraNet.com blog (blog.quadranet.com).

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