Friday, February 24, 2012

How politicians could kill SaaS with stupidity

Back when I was doing SaaS a few years ago I raised the issue of the Patriot act as being a reason why cloud providers would be setting up in Europe.  The rule however appears even worse than I knew so now the Patriot Act impact US cloud sales directly as the hosting location doesn't matter its the rules.

With the US Congress seeming to view China and the rest of the world with concern and talk of trade barriers being raised it isn't hard to see that the next four years could see a real shift in cloud and SaaS adoption, if for instance any European or Asian companies suffer publicly as a result of US policy with regards to their own information or non-US legislation (EU data privacy for instance) makes it impossible to be both Patriot Act and client complaint.

This challenge to US based vendors could lead to a flight from US shores for many of them or arms-length 'collaboration' agreements with European and Asian providers.  At worst it will lead to a collapse of these cloud providers as their markets are restricted to just the US borders while truly global players will be able to address emerging high volume markets.

If congress does start making more draconian legislation which means US companies are able to offer even less assurances to non-US organisations and non-US governments 'retaliate' by strengthening their own data privacy and retention legislation then we could very quickly find ourselves in a 'Cloud' based trade war, one governed not by tariffs but by policies because the adherence to those policies acts as a tax on the cloud provider, and if the provider is not able to obey both the US legislation and local laws then in effect that provider will have been barred from the country.

Trade wars in SaaS and Cloud will be fundamentally different, less about tariffs and taxes and more about policies and laws.  Right now Congress has firmly put itself on a trade war path.

Unfortunately I don't think they realise that.

1 comment:

Bouke Koelstra said...


Unbelievable that yoy express the same worries and warnings that I have too.
It seems that there will be a new fight, who controls the data instead who controls the resources (oil etc.).