SAN FRANCISCO (Reuters) - Concerns about security in the cloud are flaring anew after recent revelations about government data-mining, likely spurring new technology to protect corporate and consumer information, according to a panel of cloud experts.
Reports that the National Security Agency (NSA) secretly gathers user data from nine big Internet companies, including Microsoft Corp (MSFT.O) and Google Inc (GOOG.O), have dented confidence in cloud computing, especially among customers outside the United States.
The reports have triggered debate over how far the government can go in its quest to enhance national security, and also provoked outrage from many non-U.S. users depending on large American Internet corporations for everything from email to Internet storage to social networking, industry executives told the Reuters Global Technology Summit on Wednesday.
"Are people concerned about doing business in the United States and what the U.S. could do with their data? The answer is yes," RackSpace Chief Technology Officer John Engates said. "It's something as a country we need to figure out, how to allay some of the fears about data moving through the United States."
"That's partly why people are gravitating toward the idea of private clouds that you can run in other countries."
One solution is to build "private clouds" for companies, which combine on-site computer processing power with outside cloud resources, Engates added. This gives companies more control over their data and keeps it in their own country.
Germany and China are among the countries exploring the idea of building "private" clouds within their borders - essentially versions of the public Internet cloud that they control. In the wake of the NSA scandal, France has openly called for a sovereign cloud of its own.
Meanwhile, businesses will gravitate towards industry-based clouds in sensitive sectors from financial services to healthcare. General Electric (GE.N) unveiled an "Industrial Internet" service on Tuesday to track, analyze and share data to and from products like jet engines and gas turbines.
The cloud lets companies rent remote computing power and data storage by the hour, rather than buying their own servers and running them in expensive datacenters. This can save a lot of money and give companies more flexibility to quickly increase and decrease tech spending when needed.
AWS and other rivals, such as Microsoft, Google, RackSpace Hosting Inc RAX.N and Hewlett-Packard Co (HPQ.N), are trying to win big corporations as cloud customers. However, data privacy and security have always been a barrier to adoption and the recent NSA revelations have exacerbated this.
But security and privacy are especially pertinent for consumers increasingly expanding their online profile and storing personal information in the cloud, the executives said.
"The security and privacy concerns are very real for consumers," said Tien Tzuo, founder of Zuora, which sets up payments and billing for cloud software service providers.
"There's a sense that there needs to be a new breed of technologies to give a little bit more control of their private information back to consumers. And I think we're going to see a lot of innovation in that area over the next few years."
Businesses on the other hand, can employ a wide range of tactics. AWS, Amazon.com Inc's (AMZN.O) cloud computing business, provides ways for customers to encrypt data they store, said Terry Wise, director of business development.
Some also argue for a hybrid cloud approach. Secure data can remain on the inhouse servers while cloud computing does the "heavy lifting" in terms of raw processing, the executives said.
Wise said that AWS has already set up specific cloud environments for industries that have to comply with stricter regulations on things like data privacy and security. Its GovCloud service is built for government customers, while "FinQloud" is for the financial-services sector.
Despite persistent concerns about cloud security, some corporations, like Netflix Inc, are aggressively riding the trend and steadily eliminating inhouse computing power. Netflix CTO Adrian Cockcroft told Reuters the videostreaming giant was down to one datacenter from three just a few years ago, and now relied on Internet software provided by Workday and Google to handle such functions as human resources.
"We're systematically disassembling the corporate IT components," he said.
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Reporting by Alistair Barr; Editing by Ryan Woo