In Depth

Data Localization Center has become a popular trend

Data Localization Center in multinational technology enterprises will become a tendency in the future.

Influenced by the global data security policies and political factors, the businesses referring to big data processing of multinational technology enterprises are increasingly targeted by the government and business organizations. In the future, the Data Localization center in multinational technology enterprises will become a tendency.

Many Regions Promote Data Storage Localization

The report released by Reuters on 20th indicated that according to a secret disclosure document, Facebook lately told the Irish High Court that if it was not allowed to transfer European user data into the United States, its business in the EU will not work. According to the report, EU Privacy Regulatory Authority is increasingly tightening the regulation of multinational technology giants transmitting their EU user data to the countries where their enterprises are located, in order to ensure the data security of the EU.

The Irish Data Protection Commission sent an email to Facebook at the end of August, asking it to stop transmitting data from its EU users to the United States, or else it will confront a fine of 2.8 billion euros. Facebook became the first tech giant that was explicitly asked by the European Union in this way.

Data Localization in India

A similar situation happened in India. Indian Federal Parliament held a mid-year conference recently, and the discussion on promoting the “Personal data protection” proposal into law made a comeback. The proposal was originally submitted in December 2019, and its core claim is to require technology companies operating in India to classify “sensitive personal data”  separately and accomplish local storage.

After investigation, the working group searched for information and data management policy sent by the government of India suggested that all data generated in the country should be stored locally, including digital payment and other businesses. The original intention of the proposal is to better protect India’s data sovereignty, especially in the situation of the increasingly cross-border flow of data, the new policy will help India to establish a more forward-looking data protection mechanism.

Disadvantages of Data Localization in India

In India, most of the data service enterprises are multinational American-funded companies. For the sake of saving cost, the storage servers are generally set outside India, and the data storage centers in India are concentrated in five big cities. The climate in India is hot and humid, and the cost of electricity is high. If the local data storage center is used at the request of the new policy, the operation cost will be inevitably increased. Study shows that if India finally decides to adopt localized data storage, GDP may reduce by 0.8% and investment by 1.4%.

The small start-ups which relate to technology in India may also have to afford 60% of the cost of being forced to comply with the regulation, which may lead to financial distress.

data localization

Where to build Localized Data Centers?

As analyzed by XiangLigang, multinational technology enterprises will mainly consider the following aspects for the location of data centers: firstly, the security; secondly, the operational capacity; thirdly, energy supply and operating costs, including temperature in different regions and other factors. From the perspective of security, the construction of data centers should relatively near the customers, and it’s necessary to have more than one place for backup and reliable technical support.

While considering an operation, the cold data that is not frequently accessed can be stored at a relatively far distance, but online data such as hot data, which is frequently accessed by computing nodes, should be stored, nearby customers.

Finally, factors such as temperature, power, and others also have a lot to do with the location of data storage. For example, in China, the construction of data localization centers tends to site in the northwest and southwest, where the temperature is lower and near the hydroelectric stations and coal mines. Since it can provide cheap energy and the energy consumption of the database is less. In a global view, Ireland and Singapore are also preferred countries for multinational enterprises to build localized data centers.

a data center
a data center

There are already several data centers in Nordic Regions

According to Handelsblatt, Ireland has been a top priority for global technology giants to establish European data localization centers. The first reason is that compared with many other EU countries, Ireland’s tax policy is easier for multinational enterprises avoid tax; the second is that the headquarters of EU Privacy Regulatory Authority is also located in Ireland, which is convenient for communication; the third is that Ireland has sufficient IT talents. And the Irish government intends to act as the “vanguard” of EU data regulation to promote the local IT industry and promote economic development.

WirtschaftsWoche reported that Europe is the largest online market all around the world. As early as 10 years ago, American technology giants have set up data centers in Europe, which drove the local economy meanwhile. Since 2007, Google has invested 17 billion euros in European Internet infrastructure and has established data centers in Finland, the Netherlands, Ireland, and Belgium respectively. Investment enlivens economic activity there, creating more than 13000 full-time jobs in the EU each year. The first European data localization center of Facebook opened in Sweden in 2013.

Benefited from the cold air-cooling equipment in northern Europe, the second European data center built in Ireland will be Facebook’s sixth data center in the world. Apple’s European data center is located in Vyborg, the middle of Denmark. It was built in 2017 with a total investment of 1.7 billion euro, which is mainly responsible for supporting Apple’s online services throughout Europe. In August, Tiktok also announced a plan to spend $500 million to build the first European data center in Ireland. The data localization center, which is scheduled to be put into operation in 2022, will be used to store data of all European users, including videos, messages, and other data generated through Apps.

Data Localization in Asia

In Asia, multinational tech companies are turning their attention to Singapore. Zoom, the American video conference company, recently announced that it will set up a data center in Singapore, which is its first data center in Southeast Asia. Previously, Facebook, Google, Amazon, and other American technology giants have also set up data localization centers here to meet the market demand in the Asia-Pacific region, including India. The CEO of Keppel DC REIT believes that Singapore will be one of the three most dynamic data center markets in the world. Some OTT companies and cloud service providers in China use Singapore as a bridge to connect the rest of the world.

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Jack Chan

Pre Editor in chief of FirmKnow News.
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