OneTrust_Square Banner_300x250_DD_ROS_01_19

With cloud computing, many fear losing control. True, supply chains may be complex: services may be layered; separation of ownership, control and use is common not only for services, but also software and hardware. However, users can retain control in cloud computing—depending. But given the increasing virtualisation and, more significantly, abstraction of computing resources that cloud computing enables, logical control trumps physical control—whether in terms of computing, storage or networking. In particular, it is logical control over access to data that matters most. 

The Data Export Restriction

Consider the data export restriction under Articles 25-26 of the Data Protection Directive (DPD). This bans any “transfer to a third country” (outside the EEA) of personal data, unless certain qualifications are met, e.g., use of model clauses or the EU-U.S. Safe Harbor framework. The original legislative purpose of this restriction was anti-circumvention: to stop controllers from avoiding being subject to substantive DPD principles simply by moving personal data to a third country. Against the background of the 1990 proposal’s requirement that EC member states apply its data protection laws to “all files located in its territory,” the restriction made sense.

Recognizing the difficulty or impossibility of determining physical location of electronic data, the 1992 amended proposal changed this jurisdictional basis to use of 'equipment' in the EEA. Furthermore, it subjected EU-established controllers to DPD principles regardless of where the data were “located.” However—crucially—the restriction was neither deleted nor consequentially amended even though, arguably, following deletion of the 'EU-located data' jurisdictional basis, there ceased to be good reason on anti-avoidance grounds to restrict data locations.

Take websites. If EEA controllers publish personal data on websites, they must do so in compliance with the principles. If it is not fair and lawful to make certain personal data available publicly on a website, then it shouldn’t be published, regardless of provider or server location or the restriction.

Problems with Transfers and “Third Country” 

The fact that that “transfer to a third country” is undefined poses another problem. What does “transfer” mean in the age of the Internet?

In Lindqvist, the European Court of Justice decided there was no “transfer” when a volunteer uploaded personal data to an EEA-established web hosting provider's server, noting that if the restriction were interpreted such that a “transfer” occurred with every webpage upload of personal data, the restriction's 'special regime' would apply generally and prevent any uploading of personal data on the Internet if even one third country was found inadequate.

The European Data Protection Supervisor considers Lindqvist to mean the restriction doesn’t apply to public websites, but applies only to sites where transfers are intended to specific third countries, such as an intranet with known users/locations.

To the UK Information Commissioner, a “transfer” occurs upon access by third country visitors if the uploader intends, or is presumed to intend, to give such visitors access, similar to The Netherlands’ submission to the Lindqvist court.

Accordingly, I suggest intention to enable those subject to a third country’s jurisdiction to access personal data seems a better test than “transfer.”

Lindqvist might suggest that no “transfer” should occur if EEA controllers use EEA-established cloud providers to process personal data, irrespective of server locations. However, data protection authorities consistently interpret “transfer” as “movement of personal data’s physical location to a third country”, e.g., in the well-known Swift incident.

In Odense, a Danish municipality wished to use Google Apps *SaaS. The Danish DPA considered that there might be impermissible “transfers” because personal data could be processed in data centres in “Europe” outside the EEA, unless a recognized mechanism such as model clauses was used. But a data centre is not a legal entity that can sign a contract. Contracts may only be made with whoever owns/operates the data centre—here, Google Inc. Transfers to Google’s U.S.-located data centres were permissible because it participates in Safe Harbor, yet transfers to Google’s data centres located in any third country were not, absent model clauses or the like—despite Google's binding Safe Harbor commitments.

This approach was perpetuated in the Article 29 Working Party’s subsequent cloud computing opinion (WP196). It also stated that the current legal framework “may have limitations” because controllers lack real-time knowledge of cloud locations. However, arguably, the limitations relate not to such lack of knowledge, but to DPAs’ requirement that controllers must always have such knowledge.

The restriction has become what I call a Frankenrule: it has taken on a life of its own. Separately from, and regardless of, compliance with the DPD's substantive principles, many DPAs insist on physical location of data within the EEA, or use of permitted mechanisms like model clauses or derogations. 

Data Location and Data Realities 

Consequently, cloud providers are increasingly allowing users to choose data location. The associated costs, e.g., building EEA data centres) are likely to be passed on to users, reducing one of the benefits of cloud.

But today, storage and processing of a dataset, including metadata and temporary caches, may be distributed across different equipment in one or more data centres. Data and processing operations are often replicated to multiple locations within and across data centres. Thus, data movements are often frequent, multi-point and/or multi-stage. Data are accessible remotely via Internet or private network without physical access to storage equipment; conversely, data may be physically moved to a third country without anyone in that country having access to intelligible data, if, for example, it’s been encrypted beforehand.

Nowadays, physically confining data to the EEA does not equate to or guarantee data protection. Yet vast amounts of time and resources are poured into compliance with the restriction, which could be better spent on improving information security. 

Future Answers? 

Although current reform proposals, notably the draft General Data Protection Regulation, aim to modernize laws, they could hold back cloud computing. Instead, let’s go back to basics. The restriction’s legislative purpose was to ensure compliance with DPD principles. The “what” is compliance. The “how” is control over logical access to personal data, particularly intelligible personal data. Here, information security plays a major role to protect confidentiality, integrity and availability.

Physical location is just one factor. It is relevant to security, but shouldn’t be considered an end in itself. Indeed, multiple physical locations may enhance security; e.g. backups in different countries to mitigate natural disasters’ impact on availability and integrity or governmental attempts to take down services or trace users.


So we return to the role of technology and effective jurisdiction. A country may claim jurisdiction on any basis it likes, but its claims may be ineffective unless it can enforce them. In practice, this requires some real connection with that country: incorporation, an office, staff and/or assets there. Separation of ownership/use of resources, combined with remote access, encryption and backups elsewhere, may positively protect cloud users against the country of data centre location having effective jurisdiction over them, as exemplified by file-sharing facilitator The Pirate Bay’s move to the cloud.

Controlling logical access to personal data, particularly intelligible data, is far more important than physically restricting data location to the EEA. The focus should not be on where personal data are located, but on who can access personal data, how (and how to control such access) and, crucially, what they can do with the data and why. Let’s not lose sight of the DPD’s principles.

To achieve a better balance between data protection and international commercial/social data flows, we don’t need to restrict physical data location: we need better, more technologically-neutral rules regarding security, transparency and accountability that properly recognize the role that code, not just law, can play in protecting personal data. 

It is therefore heartening that the Trusted Cloud Europe policy vision document, recently issued by the European Cloud Partnership’s Steering Board for feedback by 2 May 2014, contemplates the possible reduction of data location restrictions in similar vein: “it is often possible and advisable to replace formal legal requirements (such as geographic location of the data) by the corresponding functional requirements (such as ensuring the accessibility and security of the data).”

Written By

Kuan Hon


If you want to comment on this post, you need to login.


Board of Directors

See the esteemed group of leaders shaping the future of the IAPP.

Contact Us

Need someone to talk to? We’re here for you.

IAPP Staff

Looking for someone specific? Visit the staff directory.

Learn more about the IAPP»

Daily Dashboard

The day’s top stories from around the world

Privacy Perspectives

Where the real conversations in privacy happen

The Privacy Advisor

Original reporting and feature articles on the latest privacy developments

Privacy Tracker

Alerts and legal analysis of legislative trends

Privacy Tech

Exploring the technology of privacy

Canada Dashboard Digest

A roundup of the top Canadian privacy news

Europe Data Protection Digest

A roundup of the top European data protection news

Asia-Pacific Dashboard Digest

A roundup of the top privacy news from the Asia-Pacific region

Latin America Dashboard Digest

A roundup of the top privacy news from Latin America

IAPP Westin Research Center

Original works. Groundbreaking research. Emerging scholars.

Get more News »

IAPP Communities

Meet locally with privacy pros, dive deep into specialized topics or connect over common interests. Find your Community in KnowledgeNet Chapters, Sections and Affinity Groups.

IAPP Job Board

Looking for a new challenge, or need to hire your next privacy pro? The IAPP Job Board is the answer.

Join the Privacy List

Have ideas? Need advice? Subscribe to the Privacy List. It’s crowdsourcing, with an exceptional crowd.

Find a KnowledgeNet Chapter Near You

Talk privacy and network with local members at IAPP KnowledgeNet Chapter meetings, taking place worldwide.

Find more ways to Connect »

Find a Privacy Training Class

Two-day privacy training classes are held around the world. See the complete schedule now.

The Privacy Core™ Library Has Evolved

Privacy Core™ e-learning essentials just expanded to include seven new units for marketers. Keep your data safe and your staff in the know!

Online Privacy Training

Build your knowledge. The privacy know-how you need is just a click away.

Upcoming Web Conferences

See our list of upcoming web conferences. Just log on, listen in and learn!

Train Your Team

Get your team up to speed on privacy by bringing IAPP training to your organization.

Let’s Get You DPO Ready

There’s no better time to train than right now! We have all the resources you need to meet the challenges of the GDPR.

Learn more »

CIPP Certification

The global standard for the go-to person for privacy laws, regulations and frameworks

CIPM Certification

The first and only privacy certification for professionals who manage day-to-day operations

CIPT Certification

The industry benchmark for IT professionals worldwide to validate their knowledge of privacy requirements

FIP Designation

Recognizing the advanced knowledge and issue-spotting skills a privacy pro must attain in today’s complex world of data privacy.

Certify Your Staff

Find out how you can bring the world’s only globally recognized privacy certification to a group in your organization.


The IAPP’S CIPP/E and CIPM are the ANSI/ISO-accredited, industry-recognized combination for DPO readiness. Learn more today.

Learn more about IAPP certification »

Are You Ready for the GDPR?

Check out the IAPP's EU Data Protection Reform page for all the tools and resources you need.

IAPP-OneTrust PIA Platform

New U.S. Government Agency privacy impact assessments - free to IAPP members!

IAPP Communities

Meet locally with privacy pros, dive deep into specialized topics or connect over common interests. Find your Community in KnowledgeNet Chapters, Sections and Affinity Groups.

Privacy Vendor List

Find a privacy vendor to meet your needs with our filterable list of global service providers.

More Resources »

Europe Data Protection Intensive 2017

The Intensive is sold out! But cancellations do happen—so hurry and get on the wait list in case more seats become available.

Global Privacy Summit 2017

The world’s premier privacy conference returns with the sharpest minds, unparalleled programs and preeminent networking opportunities.

Canada Privacy Symposium 2017

The Symposium returns to Toronto this spring and registration has opened! Take advantage of Early Bird rates and join your fellow privacy pros for another stellar program.

The Privacy Bar Section Forum 2017

The Privacy Bar Section Forum returns to Washington, DC April 21, delivering renowned keynote speakers and a distinguished panel of legal and privacy experts.

Asia Privacy Forum 2017

The Forum returns to Singapore for exclusive networking and intensive education on data protection trends and challenges in the Asia Pacific region. Call for Speakers open!

Privacy. Security. Risk. 2017

This year, we're bringing P.S.R. to San Diego. The Call for Speakers is now open. Submit today and be a part of something big! Submission deadline: February 26.

Europe Data Protection Congress 2017

European policy debate, multi-level strategic thinking and thought-provoking discussion. The Call for Speakers is open until March 19.

Sponsor an Event

Increase visibility for your organization—check out sponsorship opportunities today.

More Conferences »

Become a Member

Start taking advantage of the many IAPP member benefits today

Corporate Members

See our list of high-profile corporate members—and find out why you should become one, too

Renew Your Membership

Don’t miss out for a minute—continue accessing your benefits

Join the IAPP»