Since his inauguration in January 2017 Donald Trump has overseen a major shift in global perceptions of the office of the President and of the US as a nation. The latest study from the Pew Research Center highlights that just 22 per cent of people have confidence in President Trump to do the right thing when it comes to international affairs, compared to 64 per cent who felt they could trust Barack Obama. The report also shows that this coincides with an accelerating increase in people expressing unfavourable opinions about America more generally.
While this is clearly of great concern in and of itself, this sharp decline of faith in the US and its president could also have a severely detrimental impact on a number of industries that rely on stability and trust – in particular the cloud computing industry.
When it comes to cloud computing and storage, businesses and individuals need certainty that their data will be properly protected. It’s important to remember that every piece of information stored still requires a physical home, and that data privacy is almost wholly dependent on the location of that home. Any government, legislative and regulatory uncertainty is likely to make organisations think twice about where they host their data.
While the public cloud computing market continues to expand, and according to Gartner is expected to be worth $383.4 billion by 2020, IDC’s latest Worldwide Public Cloud Services Spending Guide suggests that the US’s dominance of this market may be starting to come under threat. Seven of the eight regions in the analysis are forecast to experience CAGRs greater than 20 per cent over the next five years. The US though is expected to experience the slowest growth of all the regions analysed.
However, this increased market pressure on US cloud computing providers has been massively amplified by the scale of the disapproval of President Trump’s actions since taking office.
Indeed, one of the new President’s first acts was to sign a controversial executive order that potentially jeopardised EU-US Privacy Shield. In trying to bolster protections for US citizens the executive order appeared to remove protections for Europeans when their data is being handled in the US. EU commissioners are still seeking clarification on the implications for EU citizens.
Similarly, Trump’s appointment of Mike Pompeo as CIA director brought into the heart of the administration 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. As if to reaffirm the point, at his confirmation hearing Pompeo restated that he would seek to increase US security agencies’ ability to collect personal data on citizens.
Then in March the now-departed FBI Director, James Comey, notoriously declared that “there is no such thing as absolute privacy in America”.
These actions have served to severely dent public confidence in the US when it comes to data privacy. Research conducted by Artmotion in March found that over 50 per cent of UK and US citizens feel that online data privacy is less secure since President Trump was elected. The survey of over 500 people also found that nearly a quarter of (24 per cent) US citizens are now most fearful of their own government when it comes to online surveillance, compared to 20 per cent that said Russia was their biggest concern and 15 per cent that said China. This is a significant shift from Artmotion’s previous research in 2015 when both China and Russia were considered bigger threats by US citizens.
Likewise, in June 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.
The impact on US cloud providers
So just how much do US cloud computing providers stand to lose as a result of this rapidly declining trust in President Trump?
It is obviously still early days, but it is possible to discern some clear early warning signs for the US. Most significant is the rising interest in non-US based cloud providers. For example, in Q1 2017 Artmotion itself saw a 20 per cent increase in enquiries, translating to a 14 per cent increase in revenues, coming from US companies compared to the same period last year. This increased demand came from financial institutions, NGOs and law firms – all sectors that deal with highly sensitive data and rely heavily on strong data privacy.
While it is too early for definitive evidence on the possible cost of Donald Trump’s presidency to the US cloud computing market it is possible to make some reasonable estimates. Using the available data, Artmotion estimates that US cloud computing providers could stand to lose $10.1 billion from 2017-2020.
$10 billion represents over 7 per cent of the current US cloud computing market. This estimate assumes the US year-on-year growth rate slows by an additional 0.7 per cent-1.1 per cent per year to 2020 on top of the reduced CAGR forecast by IDC.
While it is true that the in the short term the US will continue to dominate the global cloud computing market, there is clearly plenty of reason for US providers to be more fearful in the longer term.
Indeed, it’s worth remembering that this isn’t the first time we’ve been here. Edward Snowden’s revelations about PRISM and the NSA’s mass surveillance techniques were hugely damaging to US cloud companies. It also encouraged many businesses to completely rethink their data strategies, rather than continuing to trust that US cloud providers would guarantee the levels of data security and privacy they need. The impact that President Trump could have needs to be understood in that context.
For the US, losing its grip on the global cloud computing market would be a significant economic blow. However, it seems that President Trump and his administration will continue to double down on their efforts to weaken data privacy and encryption in the US.
Businesses are rightly appalled by the idea that their data should be made less secure. As a result, the impact on US cloud providers could be even more severe than our current estimates suggest.
Mateo Meier, data privacy expert and CEO, Artmotion
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