Illustration by David Simonds

WORRYING about the next big thing in high-tech may seem otherworldly just now. The world is flirting with recession and IT is likely to suffer badly as a result (see article). Yet this will not stop a shift that promises to affect everyone (see our special report this week). Computing is fast becoming a “cloud”—a collection of disembodied services accessible from anywhere and detached from the underlying hardware. The chances are that much of business and everyday computing will one day be mediated by this ethereal cloud.

This presents a paradox. On one hand, computing will be a borderless utility. Technically, it need not matter whether your data and programs are stored down the road or on the other side of the world; everything will look as if it is happening on the screen in front of you. On the other, geography still matters. The data centres that contain the cloud, each often the size of several football pitches, cannot be built just anywhere. They need cheap power, fibre-optic cables, a chilly climate and dry air (otherwise you have to remove heat and humidity, which do horrible things to electronics). Good sites are scarce. Iceland fits the bill. Google is even thinking of building floating data centres, cooled by seawater and powered by the waves.

The legal and political issues are thornier. Even more than previous cross-border utilities, such as the telephone and the internet, the cloud will be a cosmopolitan prisoner to laws that are mainly local. Personal information will be nowhere and everywhere, but most privacy laws still assume that data resides in one place. It is the same with obscenity, hate crime and libel. And online crooks can easily jump from one jurisdiction to another, whereas the authorities from different countries have yet to learn how to co-operate.

The danger is less that the cloud will be a Wild West than that it will be peopled by too many sheriffs scrapping over the rules. Some enforcers are already stirring up trouble, threatening employees of online companies in one jurisdiction to get their employers based in another to fork over incriminating data for instance. Several governments have passed new laws forcing online firms to retain more data. At some point, cloud providers may find themselves compelled to build data centres in every country where they do business.

There is a balance to be struck here between sovereignty and efficiency. If democracies decide to ban certain types of speech or to protect their citizens' data, they must be able to enforce their rules. Yet at the same time, the more the cloud is lassoed with regulation, the more its costs will grow. That would be a loss. The cloud's main promise is to make computing cheaper using huge economies of scale. Such savings promise to help countless smaller firms in developing countries, say, to benefit from IT and the productivity gains it creates.

The dearth of distance

It will not be easy to strike the balance, but at the very least governments can enhance efficiency without threatening their own sovereignty. Countries could sign up to a global minimum standard in areas such as privacy. Law-enforcement agencies from different countries could foster the habit of co-operation. Governments need to be sure that standards are not just an underhand way of keeping the data business within their own borders. Even then, some national differences are bound to endure, so cloud-computing services will have to take place on systems designed to cope. For instance, Microsoft, which is building a global computing platform, is designing a system that can accommodate some regulation, such as keeping data within national borders. The cloud may be global, but the climate will sometimes be local.