Great things are expected of Gaia-X. Named after the Greek goddess of the earth, the project should be nothing less than the “gold standard for cloud services worldwide”. At least that is what obstetrician and Minister of Economics Peter Altmaier (CDU) would like. A good year ago, he presented the project as a Franco-German initiative with his French counterpart Bruno Le Maire at the digital summit of the German government Gaia-X. The initiators see the project as “the cradle of an open and transparent digital ecosystem in which data and services can be made available, merged and shared in a trusting manner”. To this end, new and existing offers are to be networked with one another via open source applications and open standards. This means that Gaia-X should ensure that there are cloud services that guarantee European data protection standards that allow data to be securely exchanged among each other across industries and countries. And best of all are competitive with American and Chinese services.
There are reservations against cloud services from the USA such as Microsoft Azure, Google Cloud and Amazon AWS, especially after the judgment of the ECJ in favor of the Austrian data protection activist Max Schrems. With his lawsuit, he overturned the so-called Privacy Shield, which was supposed to regulate the exchange of data between the EU and the USA in a legally secure manner. In July, the court made it clear that the General Data Protection Regulation (GDPR) must apply across the EU. It regulates that personal data may only be transmitted to a third country if the country concerned guarantees an adequate level of protection for the data. That, in turn, is incompatible with the US Cloud Act. This states that US companies must release customer data at the request of the security authorities.
The US corporations are also showing interest
However, US corporations like Amazon, Google and Microsoft are not excluded from the Gaia-X initiative from the outset. Economy Minister Altmaier had stated several times that tech companies from the USA should also develop offers that are compatible with the guidelines of Gaia-X. And after initial reservations, they are showing interest. Microsoft President Brad Smith, for example, called Gaia-X a “thoughtful proposal”.
Gaia-X registered 22 founding members such as SAP, Deutsche Telekom and BMW in October 2019, a good year later another 100 companies and organizations from several European countries want to support the project with money and know-how. The initiative is now a non-profit association with the somewhat cumbersome name Gaia-X AISBL. AISBL stands for Association internationale sans but lucratif, the Belgian legal form for a non-profit making association.
The billion-dollar cloud provider market is currently dominated by Amazon Web Services (AWS) with 33 percent market share worldwide. According to figures from the Synergy Research Group, companies worldwide spent 33 billion US dollars on cloud infrastructure services in the third quarter of 2020, 33 percent more than in the third quarter of 2019. After Amazon, Microsoft ranks second with an 18 percent market share, and together they serve well half the market. Third place goes to Google with nine percent, followed by Alibaba and IBM with five percent each. Only in tenth place is the first European company with a market share of one percent: SAP from Walldorf. The top ten providers share 80 percent of the market among themselves. The remaining 20 percent serve smaller national or regional cloud providers.
Many German companies use US hyperscalers
Many German companies are now among the customers of the major US cloud providers. At the end of October, Deutsche Bahn announced that it had shut down its own data centers and relocated all information technology to the cloud – to the Amazon and Microsoft clouds. The group justified this step by stating that outsourcing was more flexible and cheaper than operating the IT applications yourself. Deutsche Bank has been using Google’s cloud for its financial services since the summer. The fashion retailer Zalando recently started using machine learning algorithms from Amazon.
However, Gaia-X does not want to become a “hyperscaler” modeled on Google, Amazon or Microsoft. Rather, the cloud giants should be countered with a network of many smaller providers from Europe. But what are the odds? The market researchers from Forrester Research took a closer look at the initiative and came to the conclusion that the project, although very ambitious, is still too abstract overall. It is not yet clear what Gaia-X is exactly and where the initiators and members want to go.
Martin Endreß, CEO of one of the largest European web hosts 1 & 1 Ionos, is convinced that Gaia-X is the right project at the right time: “We have been there from the start, and for us Gaia-X is a strong impetus from the government. ” For Europe, real added value could result from this, especially by creating European tech jobs.
Endreß sees the advantage of Gaia-X in the fact that the project provides the framework in which platforms for data exchange can be created. Especially in the area of machine learning and artificial intelligence (AI), for which a lot of data is required, it makes more sense for five companies, for example, to put their data in a data pool. A common AI algorithm could then run over this, which would bring much more than if each company could only use its data to train the AI. “It is immensely important for the technological development of Europe that these data pools exist,” says Endress. In addition, the company can provide the infrastructure for these data pools with its own cloud. This fulfills all data protection and sovereignty requirements.
Public sector demand is expected to give Gaia-X a boost
Because Gaia-X should lay down which standards should apply and who has access rights to the respective data. This is also important, for example, for projects such as the electronic patient file, which patients should be able to take with them from doctor to doctor and possibly from country to country. But Gaia-X projects are not only to be used in industry and in the healthcare sector, but also for the digitization of public administration. “With its digital services, Germany is in an unacceptable 21st place in the ranking of the 27 EU countries. A high demand from the public sector would give Gaia-X the urgently needed start-up help,” says Iris Plöger, member of the BDI management board.
According to the Ministry of Economic Affairs, a need is currently being determined in almost 50 case studies and then deepened in working groups. Initially, the plan is to launch a “Minimum Viable Product” in 2021. This is the starting point for prototypes, testing critical functionalities and further developments.
For Martin Endreß the crucial point is that there will soon be concrete applications with added value for companies or the public sector. “We have written enough IT architecture concepts, the next step has to be one away from concepts towards three or four realizable applications. That has to happen in the next six months.”