News the other day that Rackspace (see disclosure) will soon be opening its first data center in Sydney, Australia. This marks the first large scale US vendor to announce a local operation in my neck of the woods – rumor has it that others won’t be far away. The news is positive for local organization who want large scale public vendors close by to answer their concerns around latency to more far-flung points of presence. It’s a great announcement any way your look at it.

But something even more interesting occurred at the unveiling – a local photography blogger was there and reports that;

Asia Pacific managing director for the global hosting provider Jim Fagan told me that Rackspace general counsel has confirmed that the US Patriot Act cannot be used to raid its local presence for evidence in investigations unless accompanied by a demand from Australian authorities…

As the original post says, Rackspace Australia would be in breach of Australian privacy laws were it to give in to US demands for data. It’s a damned-if-you-do-damned-if-you-don’t dilemma for hosters who are found to breach the host country’s laws should they accede to the reach of the more powerful US Government.

This is really interesting for a couple of reasons;

  • Existing regional-specific vendors have often given the Patriot Act as their main point of difference, claiming that only a locally hosted and situated data center can protect customers from US Federal Government purview
  • It’s rare for a vendor to be so emphatic about its intentions with regards US legislation

As the Pixntxt blog reports;

in practice it will mean little because US and Australian police and security services work closely and the two nations have mutual treaties. And the pro-forma issuing of US National Security Letters against companies, gagging them from informing their customers when their data is breached by government agencies means Australian customers will likely still be in the dark until after legal action is commenced and may even then be unable to seek public redress for their grievances.

It does however send a message and an indication of intention and that is, of itself, valuable. After seeing this post, I had a Twitter exchange with noted information security practitioner Christopher Hoff. See the dialog as follows;


Hoff tends to be a little black and white about these things and suggests that the signaled intention means little and that Rackspace will capitulate once the feds come knocking. I’m not so certain.


Firstly it is clear that having a large scale international hosting company providing a local service is a great thing regionally. It means that Australasian companies will be able to obtain a far fuller range of products that simply storage and compute. Over time I imagine we’ll see the full breadth of different product offerings provided locally and that will be net positive for local consumers.

This move is a threat to the smaller local players who have been differentiating themselves on the jurisdictional issues, claiming that using a US based data center is dangerous and making assertions that if (and when) these US companies provide a point of presence locally it too will be under the threat of Patriot Act related actions. This assertion would seem to have been somewhat reduced and these local vendors will be looking to find other ways to differentiate their service.

I have to congratulate Rackspace on strongly articulating their position. While Hoff has a point when he says that future actions may change, this does put a stake in the ground and sends a message that Rackspace will be strongly advocating for their local users. Bear in mind that this announcement comes only months after a seriously bungled set of actions by the New Zealand police against Kim Dotcom and MegaUpload and hence at a time when local organization are sensitive about US intervention. Those actions were completely at the request of the US Government and that fact does raise some questions about how strongly the Australian Government would “toe the line” in the event of a request by the US Government. That said, political pressure between Governments can often replace due legal process and hosting companies themselves have little or no control over this.

There is still a need for some locally owned, operated and situated data centers for particular workloads, but for larger scale generic hosting needs, the economic and technical advantages of a large international vendor would seem to be a fairly compelling proposition.

Ben Kepes

Ben Kepes is a technology evangelist, an investor, a commentator and a business adviser. Ben covers the convergence of technology, mobile, ubiquity and agility, all enabled by the Cloud. His areas of interest extend to enterprise software, software integration, financial/accounting software, platforms and infrastructure as well as articulating technology simply for everyday users.


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