Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on “Unleashing the Potential of Cloud Computing in Europe” ’ COM(2012) 529 final
Date: 2013-01-16
Institutions: European Economic and Social Committee
Subjects: Community certification, administrative reform, computer applications, electronic commerce, impact of information technology, information technology applications, information technology industry, technological change








C_2013076EN.01005901.xml










14.3.2013   


EN


Official Journal of the European Union


C 76/59





Opinion of the European Economic and Social Committee on the ‘Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions on “Unleashing the Potential of Cloud Computing in Europe”’
COM(2012) 529 final
2013/C 76/11
Rapporteur: Mr PIGAL

On 14 August 2012, the European Commission decided to consult the European Economic and Social Committee, under Article 114 of the Treaty on the Functioning of the European Union, on the

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Unleashing the Potential of Cloud Computing in Europe

COM(2012) 529 final.
The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for preparing the Committee's work on the subject, adopted its opinion on 18 December 2012.
At its 486th plenary session, held on 16 and 17 January 2013 (meeting of 16 January), the European Economic and Social Committee adopted the following opinion by 158 votes to 2 with 7 abstentions.
1.   Conclusions and recommendations







1.1


The Committee views cloud computing (CC) as an opportunity for European growth and competitiveness, and seeks to use this opinion to propose a different and complementary vision to that of the Commission communication. The Committee strongly encourages the Commission to consider this proposal carefully and to adjust its CC strategy accordingly.










1.2


The Committee shares the Commission's view that the use of CC in Europe needs to be developed in order to make its economy more flexible, more successful and more innovative. It therefore supports the three measures proposed by the Commission:






—


cutting through the jungle of technical standards and supporting certification schemes;










—


developing ‘safe and fair’ model contract terms for CC contracts;










—


creating a European partnership between Member States and industry to expand the public sector's use of CC.














1.3


The use of cloud computing reinforces the need to protect the public, their data and their private lives. This is why the Committee encourages the Commission to continue along this path, especially by pursuing international cooperation and strengthening the regulatory framework on:






—


protection of data and private life;










—


government access to data;










—


monitoring data and managing disputes between users and providers;










—


portability and interoperability.




The Committee also points out that these protection measures would be most effective for information stored by CC providers on European territory.










1.4


Alongside and in addition to facilitating the use of CC, and taking inspiration from the success of CC in the US, the Committee recommends that the Commission seek to promote the development of European digital energy production, i.e. the emergence and strengthening of European suppliers of CC infrastructure (IaaS: Infrastructure as a Service).
There are many possible ways of achieving this:






—


encouraging European stakeholders to become involved and invest in digital energy production projects. Target businesses could for example be telecommunications operators, software producers, etc.










—


boosting Structural Fund allocations or promoting the use of subsidies so as to promote the emergence of CC data centres managed and run by European operators; European funding for broadband could be used as a model for CC funding;










—


launching European projects for which European consortia could put forward competitive bids and thus strengthen their activities, services and products.




The objective is to use the favourable conditions (strong data protection in Europe, users' concerns regarding distant suppliers, the need for strong security guarantees, etc.) to promote the emergence of European CC suppliers, be they local, national (sovereign cloud) or cross-border suppliers (consortia across several Member States).










1.5



Restructuring linked to the ‘cloudification’ of IT services, job losses, offshoring, virtualisation and greater distances between users and IT technicians are all negative aspects which have to be taken into account. However, this social impact is not mentioned in the Commission communication.
On the contrary, the Commission uses the forecasts of a market research company to support its view that CC should lead to the creation of 2,5 million jobs. The Committee wonders whether these figures are not unattainable and disconnected from the reality of the IT domain.










1.6


Alongside the European Cloud Partnership (ECP), the Commission should start developing a ‘Cloud First Policy’ (based on that of the US or New Zealand) as soon as possible, in order to promote CC use among European and Member State administrations. The aim would be to break down cultural barriers and individual fears, and of course to benefit from both the more flexible services and the significantly lower costs of CC.
The Committee of course stresses that the Commission must incorporate safeguards for the use of CC in public services and certain sensitive private sectors in this ‘Cloud First Policy’ in order to control, or even prevent, data being hosted by suppliers that are subject to risky national regulations – such as the Patriot Act, which applies to US suppliers even if they are established in Europe.










1.7


One of the main difficulties with CC – and one of the main concerns of users (both individuals and businesses) – is dealing with disputes with a supplier outside their borders.
Taking its inspiration from e-commerce, which is just as globalised and international as CC, the Committee, which has produced an opinion on the subject (1), suggests that the Commission include ODR (Online Dispute Resolution) as a possible solution for resolving, through mediation, the majority of disputes, including those covering several jurisdictions. Since it has to be independent and impartial, this mediation could be entrusted to an existing or new European agency. It would be responsible for mediating and negotiating between suppliers and users of CC. In addition, this mediation work would make it possible to identify the main causes of dispute, recurrent problems and needs for adjustments to practices or regulations.










1.8


Although various statements by Commission representatives (at conferences, in the press, etc.) have confirmed their desire to support communication with, awareness-raising of and training for potential users of CC, the communication does not set out any concrete, quantified measures.
The Committee therefore trusts that the Commission will supplement its communication with, among other things, initiatives prioritising those users with the lowest awareness of CC, i.e.:






—


educating individual users on the usual protections and precautions relating to CC; general conditions or contracts, privacy, etc.;










—


making SMEs more aware of how they can benefit from CC; lower costs, flexibility and responsiveness to IT developments, etc.














1.9


The Committee suggests that the Commission should include the development of energy consumption standards for server farms specialising in CC in the communication.










1.10


With regard to the actions the Commission intends to take, the Committee suggests that an exact timetable be drawn up and that definite dates and progress reports be planned in detail for each of the proposed areas.




2.   Commission proposal







2.1


As a reminder, CC can be described as in the first sentence of the communication:
‘ “Cloud computing” in simplified terms can be understood as the storing, processing and use of data on remotely located computers [the precise location of which is not known] accessed over the internet.’
In addition, in 2012 the Committee produced an opinion exclusively on CC (2). The work of the National Institute of Standards and Technology (NIST), the European Parliament and the European Data Protection Supervisor is also very interesting. The Commission has published two documents (the Commission's consultation of the Committee concerns the first document only):






—


a communication (referred to below as ‘the communication’) setting out the European Commission's CC strategy;










—


an impact analysis document.














2.2


The Commission puts forward three ‘strategic actions’ to promote CC use in Europe:






—


cutting through the jungle of technical standards and supporting EU-wide certification schemes for reliable cloud service providers;










—


drawing up ‘safe and fair’ model conditions for CC contracts, not least for service level agreements;










—


creating a European partnership to promote CC, bringing the Member States together to develop public sectors based on CC.








3.   General comments







3.1


The Committee proposes a new vision for CC, illustrated by the concept of ‘digital energy’, which is becoming increasingly widely used to describe the computing capacity (storage, processing, data transfer) provided by CC.
Digital energy is provided with no need for consumers to be familiar with the production method, in other words the data centre, its location, technologies used, etc. New market segmentation is also emerging: alongside users and service providers, there are now digital energy producers who can make the huge investments necessary (in billions of dollars) to set up CC centres.










3.2


Like other forms of energy (fossil, electric, etc.), digital energy is an economic and strategic challenge.
Firstly, controlling this energy (be it in terms of production or distribution) is at the heart of the potential for growth and job creation as set out in the Digital Agenda. Secondly, an active role in the production of digital energy is necessary in order to ensure that Europe and its Member States have (at least partial) strategic independence and self-sufficiency.










3.3


The development of CC in Europe will therefore involve dealing with the entire value chain for digital energy (usage, services and production), as illustrated by the following table:








Level of Development


Description


Policy Goals


Description





Use




Individuals, businesses and public services increasingly use CC solutions




Cloud Friendly




Europe simply uses digital energy produced/developed beyond European borders





Services


Emergence of a new CC ecosystem focusing on the development of software based on CC infrastructure


Cloud Active (3)



Europe does not just use digital energy, but is active in it, through innovation and the development of new services




Production


Computing capacity made available to service providers and users (i.e. massive ‘server farms’ for CC infrastructure)


Cloud Productive (4)



Europe not just active in services but also in the digital industry, producing digital energy to be independent and self-sufficient




Recent decades have demonstrated the significance of the dependency of the Member States – or even of Europe as a whole – regarding various sources of energy: petrol, gas, electricity, etc. Should European citizens', businesses' and public services' data in future be hosted, managed and controlled by non-European CC operators, there would be legitimate concerns surrounding the impact of this dependency:






—


protection of particularly sensitive data that are crucial to strategic competition between European and non-European countries, such as in the aviation, automotive, pharmaceutical and research sectors;










—


the availability of data in the event of international tensions between ‘host’ countries and Member States;










—


equality of treatment of consumers of digital energy depending on whether or not they are citizens or organisations of a ‘friendly’ country;










—


job and wealth creation from the production of digital energy, and also from the entire service development ecosystem, in the host countries, thus disadvantaging countries that are simply ‘cloud-friendly’ users of digital energy.














3.4


However, Europe is already highly dependent on non-European providers to provide hardware, software and computer networks. The stars of social networking come from the United States, while the most popular search engines are run by firms based either in the US or in China. IT development is increasingly being outsourced to India or other low-cost countries.
The production of digital energy at global level is currently almost entirely in the hands of an oligopoly of producers. The biggest European operator, according to some studies, is OVH (Acronym for On Vous Héberge (we host you) - www.ovh.com), but it does not have the same level of global visibility and influence. Several initiatives have been launched by telecommunications operators, such as T-Systems, Telefonica Digital, Cloud Sigma, Numergy/SFR and Cloudwatt/Orange. However, they are unable to compete with the market leaders: Amazon, Microsoft and Google.










3.5


Currently, although there are some differences between the Member States' regulations, they are close to the European texts, standards and directives; hence users' fears – in some cases justified – of their data being stored outside Europe, leading to difficulties and legal stalemates in the event of disputes.
In addition, the greatest cause for concern among users is the ‘Patriot Act’. This act came out of the war on terror (following the September 11 attacks), and allows the US government or a federal judge to access any data hosted and controlled by an American company, whether or not the owner of the data is American and including data hosted in a centre on European soil. Above all, the owner of the data cannot be informed that the host has disclosed the hosted data.










3.6


Economically, the sector should, according to the Commission, make it possible to create 2,5 million new jobs in Europe in the next eight years and contribute as much as EUR 160 billion a year to EU GDP (around 1 %).
The Committee questions whether the figures in these objectives are relevant – a detailed analysis of the impact of CC on the ground shows that:






—


operation services will be ‘mutualised’ between CC clients, which will naturally result in a reduction in staff numbers, or even offshoring;










—


CC promotes the use of standard software (cf. SaaS), to the detriment of more specific development work that would also require more developers, thus again leading to job losses.




The communication, though, does not mention or take account of the aforementioned social impact; nor does it refer to restructuring linked to the ‘cloudification’ of IT services, job losses, offshoring, virtualisation and greater distances between users and IT technicians.










3.7


Simply using CC is already generating energy savings on IT equipment. At the same time, the major suppliers of CC (storage space and associated services) have server farms, most of which use processors with a consumption of around 100 W/h per unit, which could be reduced to a tenth of that within the short or medium term. Some microprocessor manufacturers offer good value processors that release less heat (a real problem for air-conditioning in server rooms) and consume less energy.




4.   Specific comments







4.1


The Commission focuses primarily on the public cloud, and does not discuss the private cloud market. However, this approach is considered to be reliable and sometimes necessary for critical information before going wholesale into the ‘public cloud’.
It is worth noting that the ‘public cloud’ means a publicly-available cloud, not a cloud for public services.










4.2


The introduction to the communication notes that cloud technology may bring additional risks, which is not necessarily the case in reality – the cloud does bring new risks, but also eliminates others.










4.3


Certain English terms such as ‘cloud-friendly’ and ‘cloud-active’ are difficult to translate into other languages; in some cases, the translated versions of the communication completely miss the point of the original version.
For example, in points 3.1 and 3.2, ‘cloud-friendly’ and ‘cloud-active’ are translated identically in some languages, although they correspond to different objectives.




5.   Analysis of the European Economic and Social Committee







5.1


The Commission's proposals to increase use of the cloud comprise:






—


improving contracts between consumers and providers of digital energy, requiring (or prohibiting) certain clauses in order to provide better protection for individual users and small businesses against the power of certain producers;










—


developing consistent, universally recognised standards to facilitate interoperability – or even portability – between different cloud platforms;










—


defining a single European CC market based on a consistent legal framework, possibly common to all Member States.




All of these proposals are specific, realistic and necessary, and the Committee therefore supports them completely. It would, however, note that the first two proposals relate to difficulties that are not specific to Europe, and it would have expected the Commission to focus on specifically European problems in its communication.










5.2


The Committee is committed to the basic goals of the Digital Agenda, i.e.:






—


establishing Europe, its Member States and its economic operators as leaders in the IT and telecommunications sectors;










—


achieving a degree of independence from other, currently leading or emerging, economic zones;










—


and, above all, creating jobs and wealth within Europe.














5.3


With regard to increasing the ‘use’ of CC, section 3.1 twice refers to ‘cloud-friendly’ as the goal to achieve. However, in a number of speeches in support of CC, the Commissioner responsible for the Digital Agenda has advocated aiming to make Europe ‘cloud-active’.
European Commission vice-president Neelie Kroes said in Davos (27.1.2011), ‘I want to make Europe not just “cloud-friendly” but “cloud-active”’ and officially announced the communication in an article on her blog entitled ‘Making Europe cloud active’ (27.9.2012). The level of development advocated in these statements is therefore more ambitious than just ‘cloud-friendly’.
The Committee is therefore surprised by the gap between the goals legitimately advocated by the Commission vice-president and the somewhat less ambitious actions actually proposed in the communication. It also points out that, in a previous opinion (5), it encouraged the Commission to be more ambitious than ‘cloud-active’ for Europe, suggesting that it should aim to be ‘cloud-productive’.










5.4


The communication does not propose creating a European operator – a ‘European super-cloud’ – to produce digital energy. In view of the mission of DG Connect, and of the difficulty of creating such a ‘giant’, the Committee understands and supports this position. The various operators in the sector with whom the Committee has been in contact (telecommunications operators, software producers, system integrators, etc.) are also unanimous in supporting this position.
However, the fact remains that a European middle ground can and must be found between an unrealistic European ‘giant’ and European ‘micro-clouds’ confined to niche markets by the commercial, financial and marketing power of global, non-European operators.
The Committee's proposal aims at developing and strengthening major European operators responsible for CC mega-centres, the future European digital industry. These operators could be local, national (sovereign cloud) or cross-border (consortia across several Member States).










5.5


The Committee also notes that, without being as large as the market leaders, European CC operators enjoy several competitive advantages:






—


CC customers are still extremely cautious and prefer a local CC supplier – in the same country or even region if possible – even if this does not allow them to maximise the cost reductions from CC;










—


data protection regulations in Europe and the Member States are still complex for users, and favour the use of national CC suppliers;










—


international regulations applicable to suppliers in other countries outside Europe are not currently appropriate for CC; the best known example of this is the US Patriot Act.




These favourable conditions for the emergence of European operators will not last, however, and it is therefore important and urgent that the Commission take action to promote the emergence of European operators during this favourable period.










5.6


Section 2 of the communication notes that ‘go-it-alone efforts at national level are unlikely to deliver optimal cost efficiencies’. The Committee urges the Commission to reconsider its position regarding the sovereign cloud.
First of all, at no point in the communication or the impact analysis is this statement backed up by any facts, which is quite surprising given how starkly it is stated.
Secondly, in the absence of an alternative solution – which, again, the communication does not provide – criticism of sovereign or local clouds is harsh and could jeopardise credible possibilities for developing robust, durable CC provision that can compete against giants from other geographical areas (India, China or the US).










5.7


The proposed approach, using a European Cloud Partnership, is largely focused on the public services sector, with a view to ‘promoting common public sector leadership’ (see Section 3.5).
The Committee acknowledges and supports the Commission's position regarding the importance of public services in Europe's socioeconomic models: they do therefore have a role to play in the development of CC.
However, the Committee finds it difficult to see how, in a general climate of tight budgets, European public services can drive innovation in CC. It also points out that Europe's most outstanding successes have come either from the private sector (e.g. mobile telephony, chip cards) or from a private sector with the benefit of public support (e.g. Airbus, Ariane Espace, etc.).
The Committee recommends that the Commission set out more explicitly what ‘leadership’ role is envisaged for this partnership.










5.8


The approach proposed by the Commission follows a ‘top-down’ model, in other words promoting use in order to encourage the development of services, and possibly the production of digital energy.
The Committee would fully support this kind of gradual, demand-driven phasing-in in an environment with no dominant operators, or with a balance between European and non-European operators. Unfortunately, that environment no longer exists, and the main operators in CC are non-European and have an oligopoly. Increasing use of the cloud could therefore have counter-productive effects that further strengthen the position of these market leaders.
The Committee is not against this increase in use, but stresses that the Commission must establish safeguards so that its actions benefit European operators and allow them to emerge in the face of the dominant position of non-European operators.










5.9


In parallel with and in addition to the aforementioned top-down approach, the Committee would urge the Commission to propose specific actions that explicitly take a bottom-up approach, in other words encouraging the establishment of CC producers at regional, national or cross-border level to then promote the development of CC services and the use of CC.
Other sectors such as the automotive or mobile telephony sectors have shown the extent to which strong European industrial production could have knock-on effects on the higher levels (services and use). Incentive measures for these sectors could be re-used for the production of digital energy.
Another example worth taking into account is the US, where the development of CC took a bottom-up approach right from the start, with the successful results we are all aware of.
The Committee would therefore suggest that the Commission take inspiration from this successful example of large-scale cloud development in order to contribute to similar success in Europe.










5.10


The Commission, like other European institutions, makes massive use of information technologies, but the solutions developed to date have very rarely been based on CC. In the meantime, the US has established the ‘Cloud First Act’ requiring the administrations covered to prioritise a cloud-based approach.
On the basis of this success, the Committee suggests that the Commission should adopt a ‘Cloud First policy’ for itself and the other institutions, so as to enable the development of a European CC ecosystem and achieve significant reductions in operating budgets.










5.11


In the past, the Commission developed and implemented grassroots measures, in particular with regard to broadband and IT modernisation. These included:






—



information and communication programmes aiming to raise awareness and provide training for relevant stakeholders at local level;










—



development programmes for innovative projects aimed at developing local ecosystems, including in regions regarded as being excluded from innovation;










—



subsidies to modernise public services, such as e-government.




In view of the success of these previous programmes, the Committee urges the Commission to plan and budget a similar programme specifically for CC.
The EESC calls for institutional and secured databases to be integrated in a regulated manner - gradually, but as soon as possible - into the cloud computing (CC) environment. This would enable citizens to manage critical data more easily (according to European and national law) and, at the same time, to grow trust in CC.










5.12


The Commission has proposed a series of actions to develop CC. The communication does not however present a definite and precise timetable for these actions.
The Committee urges the Commission to publish such a timetable as quickly as possible. Developments relating to CC technology are fast-moving. It is therefore urgent and important that all stakeholders be able to coordinate and align their own strategy with the actions of the Commission.





Brussels, 16 January 2013.


The President of the European Economic and Social Committee

Staffan NILSSON





(1)  EESC opinions on Alternative Dispute Resolution for consumer disputes, OJ C 181, 21.6.2012, p. 93 and on Online dispute resolution for consumer disputes, OJ C 181, 21.6.2012, p. 99.

(2)  EESC opinion on Cloud computing in Europe (own-initiative opinion), OJ C 24, 28.1.2012, p. 40.

(3)  EC vice-president Neelie Kroes, who is responsible for the Digital Agenda, has advocated this level of development in several speeches.

(4)  The EESC proposed this more ambitious policy goal in its previous opinion on CC (TEN/452).

(5)  EESC opinion on Cloud Computing in Europe (own-initiative opinion), OJ C 24, 28.1.2012, p. 40.