Regulation, Taxes and the Movable Cloud

Digital Realty's Mike Manos says the tax-driven Windows Azure relocation is "the beginning of a cat and mouse game that will last for some time on a global basis" between data centers and the political sector.

cloudsDigital Realty Trust executive Mike Manos has been on the front lines of data center site location. In his latest "Chiller Side Chat," Manos writes about Microsoft's decision to migrate its Windows Azure cloud platform out of its Quincy, Wash. data center, citing the state's tax policies. Manos notes the challenge of gauging the potential impact of politics and regulation in making decisions about enormously expensive data centers.

"You are essentially seeing the beginning of a cat and mouse game that will last for some time on a global basis," Manos writes at Loose Bolts. "States and governments are currently using their blunt, imprecise instruments of rule (regulations and taxes) to try and regulate something they do not yet understand but know they need to play a part of. It's no secret that technology is advancing faster than our society can gauge its overall impact or its potential effects and the cloud is no different."

In his previous position at Microsoft, Manos was deeply involved in the company's site selection as it built data centers in Quincy, San Antonio, Chicago and Dublin. "Your initial site selection is supremely important because you not only need to look for the 'easy stuff' like power and fiber, but you need to look longer term, you need to look at the overall commitment of a region or an area to support this kind of infrastructure," he writes.

The solution: The cloud must be mobile, and able to relocate if necessary. And it can be, as Microsoft illustrated this week.

"Just like its vapory cousins in the sky, the cloud will need to be on the move, even if its a slow move," writes Manos. "Because just as there are forces looking to regulate and control the cloud, there are also forces in play where locales are interested in attracting and cultivating the cloud. It will be a cycle that repeats itself over and over again."

Manos writes at length about the decisions that go into site selection, and the risks presented by regulation and tax incentives that can be offered or revoked by political systems that change with each election cycle. The Windows Azure relocation serves as a reminder that cloud enthusiasm must account for bricks, mortar and bare metal.

"It never ceases to amaze me that in a perfectly solid technical or business conversation around the cloud people will begin to wax romantic and lose sight of common sense," Manos writes. "These are very smart technical or business savvy people but for some reason the concept of the cloud has been romanticized into something almost philosophical, a belief system, something that actually takes on the wispy characteristics that the term actually conjures up. ... The cloud is essentially large industrial buildings full of computers ... I am firm in my belief that Data Centers will ultimately become the Sub-Stations of the information utility."

Read the whole post at Loose Bolts.

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