Greater focus on location of storage in Europe means more facilities are required, according to Japanese group
health strategy journal
management, engineering and
technology review
Joaquim Cardoso MSc.
Chief Research and Strategy Officer (CRSO);
Chief Editor and Senior Advisor
July 30, 2023
What is the message?
The global push for data sovereignty, driven by the need for greater control and protection of sensitive data within national borders, is significantly boosting the demand for data centres.
- Governments and companies are increasingly seeking to store data locally to comply with data protection laws and regulations, especially after the introduction of the EU’s General Data Protection Regulation (GDPR) in 2018.
- This demand for localized data storage is leading to the construction and expansion of data centres, with smaller cities becoming new locations for these facilities.
- The data sovereignty movement is considered a driving force behind the growth of the data centre industry, creating opportunities for data centre operators and attracting investments in the sector.
- As data continues to grow at a rapid pace, the demand for data centres is expected to remain strong, reinforcing the importance of data sovereignty as a key factor shaping the data infrastructure landscape.
DEEP DIVE
The global push for data sovereignty, the principle of keeping data within the borders and subject to the laws of the country where it is held, has led to an increased demand for data centres worldwide. NTT, one of the largest operators, highlights that the introduction of the EU’s General Data Protection Regulation (GDPR) in 2018, particularly in Europe, has placed significant importance on data sovereignty. This move aims to ensure greater protection and oversight of sensitive data, such as personal information and financial details.
Abhijit Dubey, the CEO of NTT’s overseas division, states that governments’ demand for data to be stored within their own countries has resulted in the need for more data centre facilities, especially in smaller cities. Previously, data was predominantly stored in large global data centre hubs like London, Frankfurt, Amsterdam, and Paris, serving multiple countries. However, the trend has shifted towards building data centres in “tier-two cities” such as Manchester and Warsaw.
The growing emphasis on data sovereignty has led content providers to reconsider their global hub strategy, diversifying their data storage requirements across various markets. This diversification has spurred investments in data centre businesses by infrastructure-focused asset managers like Macquarie Asset Management.
While GDPR has become a global standard for many companies, some countries have also implemented their data sovereignty legislation. For instance, Germany restricts data transfers to third countries, while France has established a certification scheme for cloud companies aligned with GDPR.
Non-compliance with data protection legislation can result in significant penalties, as demonstrated by Facebook’s record €1.2 billion fine for mishandling European users’ data.
Data growth, especially driven by artificial intelligence, is another key factor fueling the demand for data centres in addition to data sovereignty. The explosion of data generation, storage, and analysis has prompted the need for local data centres to comply with data protection laws.
While conventional data centres face competition as major tech companies like Amazon and Google develop their facilities, the current surge in data sovereignty requirements is seen as a positive sign for the data centre industry. Notably, Digital Realty has adjusted its earnings guidance due to a decline in space leased to tech companies in the Americas.
Overall, the data sovereignty movement is influencing data centre expansion worldwide, creating opportunities for operators like NTT. As data continues to grow exponentially, the demand for secure and localized data storage facilities is expected to remain strong, fostering further investment and development in the data centre sector.
This is an Executive Summary of the article “Data sovereignty push boosting demand for digital infrastructure, says NTT”, published on the Financial Times, and authored by Eri Sugiura in London, on July 29, 2023
To continue reading: https://www-ft-com.ezp.lib.cam.ac.uk
