US-Japan Report on Cloud Computing Wary of EU Privacy Protections

By Chad King and Nickolas Milonas

The United States and Japan recently concluded a Director General-level meeting of the US-Japan Policy Cooperation Dialogue on the Internet Economy, addressing cloud computing and other Internet-related issues. The Cooperation Dialogue is focused on developing bilateral Internet policy initiatives and includes senior-level US and Japanese government officials and industry representatives. As part of a working group on cloud computing issues, representatives from US and Japanese industries submitted a joint report to the US and Japanese governments, which highlighted the benefits of robust and widely-adopted cloud computing services but cautioned against the potential adverse impacts of increased EU privacy regulations on the deployment and adoption of cloud services.

The report is non-binding and seeks to provide both governments with information detailing industry priorities and cloud computing market issues. A US State Department communication on the report noted that the working group will continue its discussions regarding the development of cloud computing services, while seeking a balance between personal data security and the free flow of information.

The report found that recent EU efforts to strengthen personal data protections may “stifle business, slow the deployment of new business solutions[,] and create a large compliance burden” in connection with cloud computing applications. In anticipation of new, more-stringent data protection requirements, the report warned that Asian businesses now fear increased costs of doing business in Europe. The report counseled US and Japanese governments to create an environment that allows the free flow of cloud services and establish guidelines that provide for the protection of data with minimal costs to business. The report noted that from an end-user perspective, privacy and data protections are essential in fostering “trust” in the cloud.  The report concluded that the government’s role should be to maintain the balance of protecting user information while allowing “the free flow of information to support business and innovation.” 

The EU Commission recently launched an initiative to ease the regulatory burden on cloud computing and some cloud providers in the EU have suggested alternative views of the EU requirements, so the assertions in the joint report are not without controversy. However, it highlights the growing importance of cloud computing for businesses worldwide, and the key role that privacy plays in the cloud’s continued acceptance and expansion.

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