Google ended its Isolated Region initiative to offer cloud services in China and other so-called sovereignty sensitive markets that strictly regulate companies whose services include collecting or processing personal data. Begun in 2018, the Isolated Region initiative would have complied with rules in China that require Western companies providing data or networking to form joint ventures with Chinese companies. The business would also be sequestered from Google’s existing cloud services including data centers.

Bloomberg reports that, in January 2019, Google first “decided to pause its plans for Isolated Region in China and instead prioritize potential customers in Europe, the Middle East and Africa,” but shut down the entire project in May. One employee said the shutdown is “considered a ‘massive strategy shift’ … [since] Isolated Region had involved hundreds of workers scattered around the world.”

Two employees stated that the decision was “made partly because of global political divisions, which were exacerbated by the COVID-19 pandemic.” A Google spokeswoman denied those claims, saying that Isolated Region was ended because “other approaches we were actively pursuing offered better outcomes.”

With Isolated Region, the plan involved selling cloud services whereby “the partner company would have retained both physical and administrative control over user data … while also providing a barrier between Google’s Isolated Region cloud services and the rest of its data center network.” But in March 2018, concerns about potential U.S. federal surveillance grew with the passage of the Clarifying Lawful Overseas Use of Data (CLOUD) Act, which “granted U.S. law enforcement agencies more power to request personal data stored by American technology companies even if the data is stored on servers located outside of the U.S.”

Isolated Region was just one part of “Sharded Google,” a larger project to “develop new data storage and processing facilities, known as ‘shards’, that are walled off from the rest of the company’s systems.” This is part of a more general move by all major cloud providers to “develop data centers that are either physically separated or rely on complex software to keep information flows apart.”

For example, “France and Germany recently started Gaia-X, an effort to build the continent’s own data storage systems over the Internet without relying on U.S. technology giants.” The Atlantic Council director for cyber statecraft initiative Trey Herr noted that, “protectionism is a major force in these calls for data localization … [but] a lot of it is economic.”

Although Amazon and Microsoft sell cloud services in mainland China, Google has not. But, with that country’s 900 million Internet users in mind, Google began talks with Chinese firms about a joint venture for a data storage service and provided some free machine learning tools. Google Cloud chief executive Thomas Kurian shut this down after taking over the division in January 2019, but he “didn’t scrap all of Google Cloud’s China-related work,” continuing work on its Anthos service which “lets companies using one cloud provider easily add on another.”