EU telecoms regulators will spell out on Thursday how they want to accelerate the use of "cloud" computing by public bodies and companies, in the hope of boosting the bloc's GDP by nearly 1 trillion euros through the next eight years.
Concerns about privacy and data loss have hampered the take-up in Europe of cloud computing, where customers' data is stored on remote servers that can be accessed from anywhere over the Internet.
The European Commission wants to address such worries by getting experts to clarify tricky legal questions on data protection and to develop a global privacy standard, it says in a draft of the strategy to be announced on Thursday and seen by Reuters.
European customers complain that many cloud contracts do not specify who is liable when data is lost. And a proliferation of different standards for privacy and security can confuse prospective customers, though some companies have begun updating the commonly used global information security standard - ISO 27001 - to the cloud era.
Commission research shows cloud computing can cut companies' costs by up to 20 percent and groups like Amazon.Com Inc , Microsoft Corp, Google Inc and Salesforce.com Inc have been developing new products and services to attract business "in the cloud".
EU Telecoms Commissioner Neelie Kroes will detail the strategy, which the Commission says could yield 957 billion euros in increased EU GDP in the years through 2020, c reating 3.8 million jobs.
Servers in the EU's public sector are up to 90 percent under-used, Commission research shows. Optimising their use would mean they were being accessed by clients in all time zones, so that when one region goes to sleep another wakes up and the server works around the clock.
But cloud vendors, who are having a hard time selling their services in Europe, say the EU executive may be too optimistic about the rate of takeup and thus the economic benefits.
"It's been really painful to grow in Europe," Justin Pirie from Mimecast, a British cloud vendor, told Reuters. His company is directing most of its efforts towards the United States after finding prospective clients in the European Union expected them to have servers in their home country.
"For us that's half a million in investments per country," he said.
Some U.S.-based companies report that deals with European customers often hinge on whether they trust the company with their data or not.
"There is a natural caution in Europe compared to some parts of the world and providers need to be clear about their responsible data management practices," said Microsoft's Mark Lange
Companies with servers in the United States say their customers are afraid their data will be intercepted under U.S. anti-terror law, the Patriot Act, though those concerns might be overdone.
"If interception is so much of a concern they should not only avoid U.S. cloud providers, but also avoid using the UK telephone, the Internet, and the postal system," said Clive Gringas, from law firm Olswang.
Some European vendors capitalise on these worries by stating their non-compliance with the U.S. Patriot Act in their marketing campaigns.
But Thomas Boue, director of the Business Software Alliance lobby group, worries that such moves fragment a market that is already being chopped up along national lines.
Others see the attractions of being close to their users.
Telecoms firm Colt Group SA, which has 19 data centres in 13 countries, says financial clients like the London Stock Exchange appreciate the proximity of Colt's servers because it enables them to connect to the exchange in 100 microseconds to conduct high-frequency trades.
"The laws of physics tend to come into it," Steve Hughes, the company's cloud specialist said.
But potential savings on hardware costs offer vendors some hope in less well-off countries, which are lapping up cloud services.
Greece, whose debt-ridden economy is under an EU/IMF rescue programme, shows a bigger appetite for cloud services compared with one of its biggest European creditors, Germany.
"Maybe it's just that their hardware is coming up for renewal," Robert Jenkins, co-founder of Zurich-based hosting firm CloudSigma, said.
Get all the latest news and videos in your inbox. Register FREE