Microsoft to follow Amazon into United Kingdom with cloud hosting service

Microsoft Corp. said Wednesday it would offer European customers the option of storing their cloud data in Germany, addressing concerns about the security of USA data centers following reports of surveillance by intelligence agencies.

Speaking in Berlin on Wednesday, Microsoft Chief Satya Nadella - who sees the cloud as central to the company's future - said the new data centres were created to ensure that clients' data remains in Germany. That small loophole offers much greater protection against the American government. That covers most of Microsoft's services for businesses and consumers. The company has also put in place a mechanism by which it will have no access to the data unless it has permission either from the user or T-Systems, the Deutsche Telekom IT unit that will manage the data centers.

While a verdict in this is not yet ready, moving to Germany and joining forces with a local company surely helps, but on the other hand, it could trigger a series of consequences not only directly aimed at itself but also at other cloud service providers in the United States. The German data centers will serve customers in the EU and the European Free Trade Association (EFTA), which includes Switzerland, Norway, Iceland and Lichtenstein.

In addition, Microsoft announced the completion of the most recent expansion of its Ireland site and that its data center facility in Middenmeer, the Netherlands, is now operational.

The data centers boast security standards in line with Microsoft's global cloud offerings, including multi-factor authentication with biometric scanning and smart cards, data encryption by SSL/TLS protocols based on German certificates, physical security controls, and protection against natural disasters and power outages. The move is set to offer local data residency for customers based here in the United Kingdom, bringing world-class reliability and performance to government organisations, regulated industries and other businesses, Microsoft said.

"Our new datacenter regions in Germany, operated in partnership with Deutsche Telekom, will not only spur local innovation and growth, but offer customers choice and trust in how their data is handled and where it is stored", said Microsoft CEO Satya Nadella. That means many larger companies will no longer be able to house data on European users on U.S. servers, and will have to relocate that data to servers in the EU. Since the safe-harbor agreement was demolished, tech companies are finding different ways to get data from Europe and it seems that installing data centers in the country is the way to go.

Access to that customer data in the new datacenters will be under control of T-Systems. Meanwhile Microsoft and the U.S. Department of Justice have been tied in a legal fight over a demand for access to certain email held by the software company in Ireland.