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UK ‘complacent’ on data protection, OVH Cloud chief warns

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The UK is being complacent in its approach to data protection, the boss of French cloud provider, OVH Cloud, has warned.

Michel Paulin, who was appointed chief executive of the OVH group in 2018, has said the UK is showing more “complacency” around data protection compared to its European counterparts.

“We see a rise in concerns in Europe – in Spain, in France, in Germany – and there are laws that have been passed by the European Commission,” he told City A.M..

“But in the UK it is an open bar. The UK government has signed an agreement where all data can be exported from the UK to the US without any controls,” Paulin added.

He is concerned the US government could access UK company data without them realising due to the Data Access Agreement between the two countries, which entered into force in October 2022.

The attention to data comes amid a period of reckoning for the world’s biggest cloud providers, Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP) – also known as hyperscalers.

The hyperscalers are currently under investigation by competition authorities across five different countries, including the UK.

An inquiry by the Competition and Markets Authority (CMA) followed an Ofcom study which found that businesses are facing steep exit fees, discounts in exchange for minimum spend commitments and barriers when trying to switch to a new cloud provider or use multiple providers.

“Some players are using their de facto monopoly to impose their cloud services and to bundle solutions,” said Paulin.

“All these practices that are under inquiries today are against the free market and against the freedom of choice of customers. We are very pleased to see that the authorities are investigating such practices,” he added.

These fees and hidden costs can be huge and unpredictable. “You need an AI software to predict the bill if you are with a hyperscaler,” said Paulin.

In reality though, the large fees are intended to “capture and create a jail,” to make a prohibitive barrier that forces companies to stay at a single cloud provider because leaving is not financially viable – or, at best, irresponsible.

“It’s made to keep you from having a multi-cloud strategy,” he explained.

Google Cloud recently appeared to dial back on its egress fees for moving data around but Paulin said the move is just an attempt to appease the CMA and companies will have to seek Google’s approval to leave.

OVH’s share price is flagging

OVH Cloud’s share price has been struggling. The stock is down about 38 per cent over the past year and has fallen nearly 52 per cent since the company went public on the Euronext Paris in 2021.

Paulin said the disappointing performance is due to challenges over the last few years, especially in 2023, such as inflationary pressures, soaring interest rates and low demand.

But he is very confident in the company’s long term growth. “Most of these headwinds were due to the perception that the cost of the cloud was too high compared to its potential,” he explained.

Demand is expected to pick up. Europe’s cloud computing market is accelerating at speed. By 2025, it is expected to grow to nearly €136bn (£117bn), up from around €54bn (£46bn) in 2020, according to the Düsseldorf Institute for Competition Economics.

This has largely been due to an increase in digital transformation of business during and following the pandemic.

According to Paulin, concerns around data protection and sovereignty are growing in the health sector, public sector, defence and banking.

And the boom in artificial intelligence (AI) is also set to play into cloud providers’ laps because developing AI requires large data sets and therefore bigger amounts of cloud storage.

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