Google is competing fiercely against Amazon and Microsoft to build out a cloud computing offering that can establish itself as a serious competitor to AWS, but two employees have reportedly told Bloomberg that Google has abandoned a cloud computing project in China and other politically-sensitive countries, largely due to concerns over worsening bilateral relations with the US.
The tech behemoth reportedly shut down the project, known internally as "Isolated Region," which sought to address nations’ desires to control data within their borders, the employees said. The decision to close the program was a "massive strategy shift," according to one of the employees, who said hundreds of employees around the world had worked on "Isolated Region".
Given the ominous description, it's not too difficult to understand the true nature of this project: Google would essentially help empower China to enforce its "Great Firewall," which it is now trying to expand to Hong Kong.
A Google spokesperson who commented on the record to Bloomberg insisted that the project was scrapped for reasons that were totally innocuous.
A Google spokeswoman said Isolated Region was shelved because “other approaches we were actively pursuing offered better outcomes.” She declined to detail those approaches. “We have a comprehensive approach to addressing these requirements that covers the governance of data, operational practices and survivability of software,” the spokeswoman said. “Isolated Region was just one of the paths we explored to address these requirements."
“What we learned from customer conversations and input from government shareholders in Europe and elsewhere is that other approaches we were actively pursuing offered better outcomes,” the spokeswoman said. “Google does not offer and has not offered cloud platform services inside China."
According to one of the employees, the plan involved selling cloud services in what Google calls “sovereignty sensitive markets,” such as China and the E.U., where there are strict laws for companies offering services that involve the collection or processing of people’s data.
The project, which began in early 2018, sought to address rules in China that require Western companies to form a joint venture with a Chinese partner company when they provide data or networking services, one of the employees said. In such a relationship, the partner company would have retained both physical and administrative control over user data. The arrangement was intended to satisfy Chinese authorities while also providing a barrier between Google’s Isolated Region cloud services and the rest of its data center network, which stores and processes emails, documents, photographs and other data from its users, the employee said.
By handing over control of user data to third party companies in foreign countries, Isolated Region also aimed to appease privacy concerns about the U.S. government’s potential ability to carry out covert surveillance of Google’s Cloud services, the employee said. Those concerns increased in March 2018, following the passing of the Clarifying Lawful Overseas Use of Data Act, better known as the CLOUD Act, a federal law that granted U.S. law enforcement agencies more power to request personal data stored by American technology companies even if the data is stored on servers located outside of the U.S., the employee said.
Interestingly enough, the Bloomberg's editors slotted the first paragraph addressing the company's controversial business practices involving its work in China and the CCP
Some employees expressed concern about the Cloud project in China and questioned their superiors about it, according to one of the employees. But it’s not known if employee opposition was a factor in Google’s decision to stop the initiative in China or elsewhere.
Isolated Region was part of a larger Google project known as “Sharded Google,” which has sought to develop new data storage and processing facilities, known as “shards,” that are walled off from the rest of the company’s systems, according to the employees.
Major cloud providers are all racing to develop data centers that are either physically separated or rely on complex software to keep information flows apart.
It’s a costly process, driven by rising demand on two fronts. One is from firms in specific industries, such as finance, that want isolated machinery for security reasons. Another comes from laws that require data reaped inside the country to stay there, with China being perhaps the most stringent example.
Both trends are accelerating. More than 100 countries have some sort of data sovereignty laws in place, according to David Gilmore, chief executive officer of DataFleets Ltd., an enterprise software firm. In the U.S., state policies, such as California’s new consumer privacy law, provide further restrictions on how cloud companies handle data. “It’s just the tip of the iceberg,” he said.
France and Germany recently started Gaia-X, an effort to build the continent’s own data storage systems over the internet without relying on U.S. technology giants.
We're certainly curious to hear more about this "data sovereignty" project. For all the reporting BBG did here, the reader isn't walking away with a clear understanding of what this even means.
And as we've learned with 'Project Dragonfly', once Google declares a project dead, that doesn't mean it actually is.