AWS data centres launch implies all is not well following Brexit

Amazon Web Services has announced a new availability zone in London which indicates all is not well in the UK following Brexit.

The new data centres creates the 16th availability zone worldwide for the public cloud leader, and is the first available in the UK. To date, customers in the UK would have primarily been served by assets in Ireland or Germany, though the move may suggest the Brexit vote is starting to impact businesses in the UK.

Taken alone, this move implies very little, after all AWS expanding its footprint should surprise few, though there have been a few news stories rise to the surface this week suggesting all is not well. A couple of weeks ago, Microsoft Azure said it was raising its prices for UK customers due to the impact of Brexit on the pound and prior to that, research highlighted there has been a 36% year-on-year decline in the number of tenders put out by the Crown Commercial Service during September and October between 2015 and 2016.

As mentioned before, individually these examples mean very little, but as more and more begin to circulate it becomes difficult to ignore the common theme; Brexit.

But what does this mean for the data centre and the cloud industry in the UK? This could be viewed as both positive and negative.

Firstly, as in the case of transatlantic data-transmission, there will have to be a mechanism similar to EU-US Privacy Shield to regulate the transmission, storage and action of data between the UK and the EU. This is not unusual, as the UK will sit outside of EU regulations once it leaves the union, though whether EU businesses insist their data resides within the EU remains to be seen. This can be the case when it comes to EU-US data centre relationships, hence the reason Germany is developing as a hotspot for new data centres; it has some off the strictest data protection regulation worldwide.

But what impact will this have on UK businesses which deal with EU-based customers? Will the data have to be stored in the EU or will these customers be happy for the data to reside in the newly created UK availability zone, outside the jurisdiction of EU data privacy and protection regulations?

On a positive note, there is the potential for a new data centre industry to be created in the UK. As there is the potential for distinct data centre markets (inside the EU and outside of it), there could be increased demand for data centre capabilities in the UK, creating jobs and new industry.

However, a healthy proportion of UK businesses target international customers. For the larger organizations whose customers may insist on data residing in the EU (on premise or in the cloud), could this also mean certain functions are relocated to ensure they reside in the union?

Following the Brexit result a host of vendors were quick to announce the decision to leave the union would not negatively impact their own businesses or their relationship with customers, though it would have been fair to assume these were PR soundbites. Maybe we’re slowly beginning to see the consequences of the referendum.

From an IT and telco perspective, one of the most important players in this game is Elizabeth Denham, Information Commissioner for the UK government. Denham’s role is data protection and freedom of information in the UK, and how she manages to develop UK data protection regulations could impact the long-term relationship with the European Commission (hereafter known as the ‘Gaggle of Red-tapers’).

Now we all know the Gaggle of Red-tapers love a bit of regulation and rule-making, and the relationship between the UK and the EU will partially be defined by how closely Denham can align UK policy to that of the EU. The policy has to be similar enough not to irritate the Gaggle of Red-tapers in the same way the US has done, but also has to serve UK interests. It will be a delicate balancing act with potentially a lot at stake.

Telecoms.com is not stating the world is going to end because of the decision to leave the EU, though we are starting to notice more and more examples of negative consequences. The creation of another availability zone in the AWS arsenal is hardly anything unusual, though the fact it is in the UK following the vote is a very convenient coincidence. Keep an eye out for more of these convenient coincidences.