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CLOUD & DATA CENTRE SPECIAL REPORT: The ups and downs of Russia’s Wild West data centre market

10 July 2015 | Alex Hawkes, Capacity Magazine

The Russian government turned the country’s data centre market on its head in late 2014 when it announced its impending Localisation Law, by which the storage of the personal data of Russian citizens, whether held by local or international businesses, must be held in databases within Russian borders.

From  September 1 2015, data may be worked on from abroad, but must be physically located in the country. This is something of a reprieve. The initial deadline was  September 1 2016, and was brought forward to January 1 2015 before protests put it back to September 1 2015.

The ensuing chaos has been both a huge bonus for Russia’s data centres and a source of great panic and pressure. Demand for their services has skyrocketed: «It’s a bit of a Y2K moment for us,» muses Guy Willner, CEO of IXcellerate, Moscow’s premier carrier neutral data centre operator.

Willner says that not all potential data centre customers are not taking the deadline with equal seriousness: «Some companies are saying ’Let’s wait and see how it’s enforced’, and others are saying be ready for September 1,» he says, but thinks that given the bracing example of Moscow’s rigorously upheld ban on smoking in public places, they’d be advised to comply from the start.

So does this all matter to non-Russians? The country’s telecoms and ICT market is big and important, and seismic shifts in how it is run naturally have implications well beyond its borders: «It is Europe’s largest internet market,» says Willner. «It added the equivalent of the population of Greece last year alone.»

He points out the economic interdependence of Russia and the rest of Europe: «Some 10% of UK car production last year was destined for Russia,» he adds. «The Russian market makes millions for people like Land Rover and Google.»

But to date much of the key data that drives the Russian economy has been held outside its borders.

«It’s a market that may be fast growing, but it is very poorly addressed, being largely managed from overseas,» says Willner. «That will change now. There’s massively more floor space in London data centres than in Moscow – so the opportunity in Moscow is phenomenal.»