Microsoft to keep German customers' cloud data in country

Staff Writer
Columbus CEO

BERLIN (AP) — Microsoft said Wednesday it will give German customers of its online services the option of storing their data in Germany, addressing persistent privacy concerns in Europe following revelations about U.S. online surveillance.

European consumers, privacy advocates and lawmakers have cited reports based on leaks by former NSA contractor Edward Snowden to claim that data stored by U.S. companies isn't safe from U.S. government eavesdropping. Such concerns pose a threat to firms such as Microsoft, Google and Amazon, whose business model is increasingly built around data storage and so-called cloud services such as Microsoft's Office 365.

Microsoft's chief executive said the company will start next year using data centers in Magdeburg and Frankfurt that are managed by T-Systems, a subsidiary of Deutsche Telekom.

"These data centers will ensure that customers' data remains in Germany and that a German company controls access to data in accordance with German law," Satya Nadella said at a presentation in Berlin.

"Microsoft won't be able to access this data without the permission of customers or the data trustee, and if permission is granted by the data trustee, will only do so under its supervision," the company said.

In practice this would mean that U.S. authorities trying to access a German customer's data would have to work through authorities in Germany, where privacy laws are strict.

Microsoft's announcement comes a month after the European Court of Justice sunk a trans-Atlantic privacy agreement known as "Safe Harbor" that had regulated the transfer of data to the United States.

It's unclear whether, in the absence of a new data-sharing deal between Europe and the U.S., Microsoft's move might become the new norm for technology companies.

"Microsoft is putting the bar higher with this model," said Carsten Casper, managing vice president at Gartner Europe.

Among the outstanding questions is whether such an arrangement would work in other European countries and how much it might cost.

"From a German standpoint, this is a good move — but the overall market is obviously bigger than just Germany," said Casper.