IBM, Microsoft Tap New European Markets With Cloud Data Centers

Microsoft and IBM both recently launched new cloud data centers in Europe, each adding a new country to the list of markets users can choose to store their data in.

Through a partnership with Deutsche Telekom subsidiary T-Systems, Microsoft launched its first cloud region in Germany, served out of data centers in Magdeburg and Frankfurt. By giving T-Systems full control of Microsoft cloud customers’ data stored in the region, the company hopes to avoid another legal run-in with American law-enforcement officials over access to private customer data stored overseas.

IBM launched a data center in Norway, its first cloud data center in the Nordics and its 48^th cloud data center worldwide. The company has been expanding physical infrastructure that powers its cloud services aggressively since 2014, when, following acquisition of SoftLayer the year before, it earmarked $1.2 billion for global cloud data center buildout.

While they aren’t leading the cloud services market in terms of revenue, both IBM and Microsoft have more data centers supporting their cloud services than any other player in the market, including Amazon Web Services.

The expansion announcements come as competition continues to heat up in the cloud services market, especially in the market for enterprise cloud services. In addition to competition from AWS, the leader in the space, Microsoft and IBM are up against Google, which recently decided to put more resources behind pursuing enterprise cloud customers, and Oracle, which earlier this month announced a renewed push for capturing a bigger piece of the enterprise cloud pie, and which has reportedly been expanding cloud data center capacity.

Read more: Oracle’s Ellison Takes Shot at Amazon With New Cloud Services

The Oracle announcement is especially relevant for IBM. A big part of the announcement was the launch of a new bare-metal cloud. Bare-metal cloud services are one of the things that set IBM SoftLayer apart from giants like Amazon, Microsoft, and Google.

The new IBM cloud data center is in Fetsund, 30km outside of Oslo. The company said it will support growing cloud adoption in the Nordic region and emphasized the ability to now store data that belongs to customers in the Nordics locally.

Data sovereignty is a big part of the Microsoft announcement too. Germany has some of the strictest data sovereignty rules in the world, and top cloud providers have been opening data centers there to ensure they can serve German customers who cannot store their data outside the country.

In an unusual arrangement with T-Systems, Microsoft designated the data center provider as a “data trustee,” meaning the German company is the one controlling access to Microsoft customers’ data stored in the new region, not Microsoft.

The move is in response to the protracted legal battle Microsoft has waged with the US Justice Department, which has been seeking access to a customer’s data stored in Microsoft’s Dublin, Ireland, data center to assist the department in a criminal investigation. Because Microsoft is based in the US, the government argued, it should be required to comply with a US warrant seeking access to the data.

In July, the US Court of Appeals for the Second Circuit ruled in Microsoft’s favor, reversing an earlier ruling by a lower court, which said Microsoft had to comply with the warrant. The government may appeal the latest ruling, but it theoretically will not be able to put Microsoft in a similar situation in Germany, where a German company now controls access to Microsoft’s customer data.

See also: Top Cloud Providers Made $11B on IaaS in 2015, but It’s Only the Beginning