According to a recent white paper by Artmotion, the U.S. cloud computing industry could potentially lose over $10 billion by 2020. They attribute this to the perception around the world that President Donald Trump has a “shaky reputation on data privacy,” even though he hasn’t been in power very long yet. For some, this casts a shadow over cloud computing in the age of Trump.
Pointing to a recent study from the Pew Research Center, 22 percent of people claim to have confidence in President Trump, a sharp drop from the 64 percent cited in the final years of Obama’s presidency. Additionally, favorability ratings toward the U.S. have fallen from 64 percent to 49 percent. Another problem is the Trump Administration has been roiled by turnover. More than a quarter of the members of the White House council that oversees the U.S.’s response to cyber-threats resigned in August.
Politics aside — and there’s still plenty of time for the Trump Administration to regain its cybersecurity footing — we are only interested in what the current perception of the U.S. has on cloud computing and the effect that may have on this industry.
U.S. cloud hosting sites
Although information is stored in the cloud for many businesses, this data is still hosted in a physical place somewhere. If customers’ trust in the United States is declining, this means that fewer people will feel secure hosting their private data in U.S.-based databases, unsure if it will be protected well.
While the cloud computing market is still expanding, estimated to be worth $383.4 billion by 2020, the United States as a leader in cloud computing is under threat, according to IDC’s most recent Worldwide Public Cloud Services Spending Guide.
While Artmotion suggested that “the US will generate more than 60 percent of total worldwide cloud revenues to 2020,” it is also the country that is expected to experience the slowest growth. Although, it’s important to consider that the growth is only slightly slower at 19.9 percent, seven of eight regions that were analyzed “are forecast to experience CAGRs greater than 20 percent over the next five years.”
For example, Western Europe’s public cloud market is anticipated to “grow at a healthy 23.2 percent CAGR over the forecast period.” European companies have been relatively slower in adopting cloud services, which could be a potential reason for their larger growth, however.
Even greater doubt?
Many cloud service providers are already fretting over the numbers given by these reports, leading to even more fear of the Trump presidency and lower confidence ratings. In fact, this research does not take any disapproval of President Trump or his administrator’s actions into account, leading companies to fear even lower growth numbers than reported.
Some of these actions that could cause even more strife in the cloud computing world are President Trump’s statements on cybersecurity as well as his “controversial executive [order that] potentially jeopardized EU-US Privacy Shield.”
The reasons cited for this executive order were to increase protections for U.S. citizens, but it also “appears to remove protections for Europeans when their data is being handled in the U.S.”
Of course, if EU citizens aren’t certain that their data is being protected in the United States, they will think twice before hosting it in an U.S. cloud computing company.
An additional privacy concern to many is the appointment of Mike Pompeo as CIA director because he has “been a vocal advocate of reinstating many of the invasive mass surveillance powers of the NSA that had been weakened in the wake of Edward Snowden’s revelations.”
In addition to wanting to increase these mass surveillance powers, he also stated that he plans to “increase U.S. security agencies’ ability to collect personal data on citizens.” Adding to the ominous tone around American security, former FBI Director James Comey stated, “there is no such thing as absolute privacy in America.”
We’ve been here before
It’s important to remember that these negative feelings towards America’s cybersecurity efforts aren’t solely related to President Trump and his administration. In fact, the United States was recently in a place of low confidence after Edward Snowden revealed many privacy concerns related to PRISM and the NSA’s mass surveillance techniques.
Because this greatly damaged many U.S. cloud companies, they have even more anxiety about the direction confidence is headed under our current leadership.
After the last drop of confidence, Artmotion said that many businesses were encouraged “to completely rethink their data strategies, rather than continuing to trust that U.S. cloud providers would guarantee the levels of data security and privacy they need.” And, unfortunately for these U.S. cloud providers, it seems that history is repeating itself.
Artmotion researchers found that, out of 500 people in March, “over 50 percent of UK and U.S. citizens feel that online data privacy is less secure since President Trump was elected.” Additionally, 24 percent of U.S. citizens don’t trust their own government not to perform online surveillance on them, “compared to 20 percent that said Russia was their biggest concern and 15 percent that said China.”
This was a quick, significant change from their 2015 research where Americans listed both China and Russia as larger threats.
While public perception is important, the heads of major companies who make the decision about which cloud provider to invest in are arguably most relevant. The numbers don’t look great here, either.
Instead, “the latest CNBC Global CFO Council survey reported that CFOs representing some of the largest public and private companies in the world variously described Trump’s leadership as chaotic, erratic, and reckless, among other equally negative terms.”
Considering that many of these polls had relatively small sample sizes and might not represent the IT industry as a whole, we have to look at some other facts to gather the true amount of potential losses based on this faltering confidence in the U.S.’s current government.
One significant issue we can point to is that there is a larger interest in cloud providers based outside of the United States. Artmotion, itself, based in Switzerland, got 20 percent more inquiries, leading to a 14 percent increase in revenues, during the first quarter of 2017 compared to the first quarter of 2016.
This increased business came specifically from U.S. companies, particularly financial institutions, non-profits, and law firms. Each of these businesses has sensitive data and cannot function properly without strong data privacy, which, it seems, they do not trust will be kept up in the United States.
In fact, since the election of President Trump, “Switzerland alone has increased its exports to the U.S. by 4.5 percent.”
Given the various research and faltering numbers, Artmotion has concluded with a “conservative assumption” that “U.S. cloud computing providers could stand to lose $10.1 billion from 2017-2020.”
What can we do?
Unfortunately, there isn’t much that individual cloud computing providers can do to stifle their losing grip on the global cloud computing market that affects not only the providers themselves but the American economy in general.
Until governments around the world stop viewing “data privacy as an inconvenience — something to be watered down and work around, rather than something to be defended,” companies will switch to storing their data in those countries where they feel it is secure.
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