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Google Cloud cancels planned Chinese venture

Doesn't want to follow Azure and AWS by working with locals

Google has scrapped plans to offer cloud services in China.

The project, called "Isolated Region", began in early 2018 and aimed to address Chinese regulations that require foreign companies that provide data or networking services to form a joint venture with a Chinese partner. Those requirements see AWS' Chinese presence operated by local company Sinnet, VMware offer cloud services through Alibaba and Azure work through 21Vianet.

According to sources who spoke to Bloomberg, Google balked at the requirement to work with a Chinese company.

Following Beijing's rules would have satisfied Chinese authorities' concerns that the US government could conduct covert surveillance of Google's cloud networks, the sources said. These concerns increased in March 2018, when the Clarifying Lawful Overseas Use of Data Act, or Cloud Act, passed, granting US law enforcement agencies powers to request access to personal data stored by American tech companies, even if the data is stored on data centres outside US soil.

The project was part of a larger Google project called "Sharded Google" that sought to develop new data storage and processing facilities, known as "shards", walled off from the rest of the company's ecosystem. The project aimed at addressing markets such as China and the EU, which have strict laws for companies offering services that collect and process personal data.

The project was dropped partly because global tensions, which were exacerbated by the Covid-19 pandemic, according to Bloomberg's sources. The sources said that Google provided documents detailing global tensions and their influence on the project's closure.

Google confirmed that the project had been dropped but denied that it was because geopolitical concerns or the pandemic. In a statement, a company spokesperson said the project was canned because "other approaches we were actively pursuing offered better outcomes."

"We have a comprehensive approach to addressing these requirements that covers the governance of data, operational practices, and survivability of software," the spokesperson said. "Isolated region was just one of the paths we explored to address these requirements."

The company is not considering offering Google Cloud in China, the spokesperson added. ®

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