US needs to stay ahead in cloud computing amid Chinese competition, says expert

US policymakers should recognize that cloud computing is strategically important and it needs to stay ahead as it has an edge over China. Jonathan E Hillman, Director of the Reconnecting Asia Project, one of the most extensive open-source databases tracking China’s Belt and Road Initiative (BRI) writing in Politico said that the cloud computing is the next frontier in Beijing’s quest to dominate the information supply chain, from handheld devices to data servers. China’s cloud providers have been thriving during the COVID-19 pandemic.

In 2020, Huawei more than doubled its share of the global market for Infrastructure as a Service, or IaaS. Unless US policymakers make cloud computing a strategic priority, that acronym may become as hauntingly familiar to them as 5G. “The flow of information guides the flow of technology, capital and talent,” Chinese President Xi Jinping explained in 2014. “The amount of information controlled has become an important indicator of a nation’s soft power and competitiveness.” The cloud is critical because it’s where everything comes together. It powers email, databases and storage, as well as artificial intelligence and big data applications requiring mountains of computing power. Like other digital infrastructure and services upon which modern societies increasingly depend, it’s everywhere, but also out of sight — and for many policymakers, out of mind, said Hillman. Moreover, China’s leading cloud providers are doing much more than selling services.

Alibaba Cloud recently unveiled a USD 1 billion push in Asia, where it promises to train 100,000 developers and invest in 100,000 startups over the next three years. It is even partnering with foreign universities to design courses for artificial intelligence, reported Politico. China’s cloud providers are also effectively packaging services with investments in hard infrastructure, which the world desperately needs. Huawei counts dozens of foreign governments among its customers for cloud infrastructure and e-government services. China’s cloud ambitions are not limited to Asia. Huawei has formed partnerships with federal data centers and IT providers in Mexico and Brazil, positioning itself to handle even more sensitive government data in the years ahead. It is also investing in Chile and Argentina.

The strategy, Huawei regional president Xiao Fei explained, is “to form a giant triangle of improved coverage and better connectivity in Latin America.” Meanwhile, the leading US providers — Amazon, Microsoft, Google — have a massive first-mover advantage. But, if China’s cloud ambitions are uncontested, the developing world will prioritize affordability over security, said Hillman. After acquiring Chinese data centers and signing service contracts with Chinese providers, foreign governments and businesses may find it difficult to switch providers down the road. On top of the normal expenses of migrating from one cloud to another, they may also face Chinese economic coercion, reported Politico.

The good news is that the United States has superior services on hand. But that also means Chinese cloud providers are effectively selling a weaker product, just as Huawei did during its rise as a telecom equipment provider. “Huawei’s products may not be the best, but so what? What is core competitiveness?” Huawei CEO Ren Zhengfei once asked his employees. “It’s choosing me and not choosing you!” For starters, US policymakers should recognize that cloud computing is strategically important. Competing with China is not just about catching up in areas where the United States has fallen behind.

Just as important, if not more so, is staying ahead in areas like cloud computing where the United States has an edge. That will require doing more in developing markets, said Hillman. Encouragingly, the G-7’s recently announced “Build Back Better World” partnership includes digital infrastructure among its four pillars. As the G-7 partners work to begin that effort, they should include a focus on cloud computing. The United States should also continue to push back against data localization overseas. Key allies and partners, including the European Union and India, are far from aligned with U.S. preferences. Another promising avenue for US leadership is pursuing digital trade deals with countries at various stages of development, advised Hillman. ANI