Commodities: Global Data Policies Restricting Growth: Report

By Angus Loten

An upswing in trade policies that restrict the flow of data and information-technology products and services across international borders is keeping some firms from expanding globally, Accenture PLC says.

The number of these restrictive measures among G20 countries is growing, forcing companies worldwide to “make fundamental changes to key strategic and operational plans” for IT architectures, recruiting or cybersecurity efforts, Omar Abbosh, the professional-services giant’s chief strategy officer, said in a report Wednesday.

The measures, many of which aim to improve data privacy or cybersecurity, can include everything from new rules concerning consumer privacy and data localization to requirements that vendors share source code with local regulatory agencies.

They reflect in part concerns over privacy and security in the wake of 2013’s Edward Snowden revelations, as well as the growing recognition that data, platforms and IT increasingly define commercial success.

Of more than 400 chief information officers and chief technology officers surveyed, 74% said they expect their firms to exit a regional market, delay or abandon market-entry plans over the next three years, as a result of increased barriers to data and IT tools, the report said.

Four in five said they factor in these and other obstacles to globalization in strategic planning.

The results are based on responses by senior IT executives at companies across eight countries, including the U.S., Germany, China and India, in a range of industries. More than half of the firms had annual revenues about $5 billion.

Accenture identified 1,263 trade measures worldwide in 2016 that restrict the flow of data and IT products or services, up from 324 in 2010. Likewise, more than 100 countries had data privacy laws in place as of 2015, up from 34 a decade earlier, the report said.

More than half of the CIOs and CTOs surveyed said barriers like these and others can restrict their ability to use or provide cloud services or data analytics, or comply with different national IT standards.

One side effect of global data regulations is the growing use of multiple cloud providers and services by large firms, as they seek digital tools and services in foreign markets, CIOs and industry analysts say.

Jim Fowler, CIO of General Electric Co., told CIO Journal in October that many large multinational companies must take a multi-cloud approach, in order to work in global markets.

“Not every cloud provider is in every country around the world, and data sovereignty laws require us to be in every country around the world,” Mr. Fowler said.

Earlier this week, Alibaba Group Holding Ltd. founder Jack Ma defended China against complaints that it creates barriers for outside competitors, saying foreign firms must be prepared to abide by China’s laws and not expect quick success.

His remarks were made at China’s annual World Internet Conference, which sponsored by the Cyberspace Administration of China, a state agency that censors content and blocks social-media platforms, including Facebook Inc.

Apple Inc. recently removed virtual private network apps from its China store, as the result of a new cyberspace law enforced by the agency.

The new law was the focus of a closed-door session on the sidelines of the conference Wednesday, The Wall Street Journal reported.

The session coincided with a new survey by the U.S.-China Business Council, which found 82% of about 100 of its member businesses with operations in China “are concerned about the impact of China’s cyber and data regulations,” the trade group said. Another 65% said they were concerned about restrictions on cross-border data flows, the survey found.

As more businesses turn to artificial intelligence, the Internet-of-Things and other digital tools for growth, “it’s clear that this is just the beginning of a complex journey that demands cross-border and cross-sectoral cooperation,” Armen Ovanessoff, principal director of Accenture research, said about the study.

Among other recommendations, it says firms need to shift resources into assessing the impact of data and IT regulations, while developing stronger decentralized and distributed systems in some markets.

Copyright (c) 2017 Dow Jones & Company, Inc.