This week, the European Parliament ended its summer holiday as parliamentary committees and political groups began meeting in preparation for next week's first plenary session of parliament in Strasbourg.

One of the items on the legislative agenda for the European Commission this fall is to prepare a draft of its new "Digital Agenda," a strategy for maximizing the bloc's benefits from information and communication technologies. Included in that plan is the goal of establishing a digital equivalent of the "single market" that already exists for goods and services.

That particularly would affect "cloud computing" applications that store data on the Internet -- services like Google's Gmail, for instance. But some citizens and governments are opposed to the idea of letting their data cross national borders, including to other EU states.

With no digital single market, the 27 member states all have their own systems governing the collection, protection and retention of private information.

That means right now, services like Microsoft's Hotmail or Google's Gmail, which store the service and the data outside personal computers, must treat each piece of European data according to the laws of its country of origin. The period a company is allowed to store users' data ranges from six months in some EU nations to two years in others.

Some tech leaders argue that the unification of data retention policy will be crucial for Europe.

"It's as big as moving to PCs in the 1970s," said John Vassallo, Microsoft's vice president for EU affairs. "It will change the economics of doing business. It will change the economics of running governments. It will create a productivity gain that some say can be measured 15 to 20 percent."

Not all are in favor

Some member states, including Germany and France, currently forbid sensitive data from leaving the country at all and there are powerful lobbies against a pan-European cloud.

One French NGO, the Association for the Development of a Digital Economy (ADEN) has petitioned its government to keep the legislative status quo, which would also mean the budget for infrastructure development would remain inside France.

"Citizens aren't ready to put all the data between Iceland and Nevada," said J.P. Brulard, the president of ADEN. "We don't think that it will become a monopoly between Google and Microsoft to be the only cloud provider on the planet. We strongly believe there's a role for the local provider.”

Brulard added that his organization is defending both the security of French citizens and the livelihoods of French companies.

Some European officials understand why countries are reluctant to give up sovereignty over their data -- just as they once may have been with some political and economic aspects as well.

"There's a psychological perspective that having it in house is much more secure but actually these cloud providers have a lot more money to spend on it and their reputation depends on it," said Giles Hogben, a researcher who authored a study on cloud security at the European Network and Information Security Agency, the EU's data security watchdog.

"Often times the cloud provider is in a position to provide more (security),” he said.

Still, Hogben doesn't take a stand on whether Europeans should accept a super-sized cloud or not. He added that there still isn't enough transparency from providers nor clarity in EU legislation that would assure consumer of the highest levels of protection. But the Greece-based researcher does believe that there would be cost savings to companies providing cloud computing services.

"The promise is of 10-fold or more saving – so everybody wants it as long as they are not exposing themselves to security risks," he said. "That's the bottom line. That's the barrier we need to overcome."

Microsoft says move is 'inevitable'

Meanwhile, Microsoft isn't leaving legislative developments to chance. The American tech giant, along with its counterparts in other areas of the sector, has been meeting with the European Commission to contribute to the drafting of the new digital strategy. That document is due this fall and while Vassallo, the Microsoft vice president, doesn't expect quick action, he does think that moving more and more to the cloud will be inevitable.

"The discussion is with the European governments and the EC as the main proponent, the governments are discussing it and I think just like they did with the single market – they will adopt it," he said. "Because we have to compete with the rest of the world or Europe will fall even further behind – and I think that's been understood."

Author: Cyrus Farivar & Teri Schultz
Editor: Sam Edmonds