Cloud computing in China: It's complicated

Today: why the Biden administration wants to thwart sales of cloud services to China, how Notion thinks it can dent Jira's share of the market for developer management tools, and the latest enterprise moves.

Cloud computing in China: It's complicated
Photo by Hanson Lu / Unsplash

Welcome to Runtime! Today: why the Biden administration wants to thwart sales of cloud services to China, how Notion thinks it can dent Jira's share of the market for developer management tools, and the latest enterprise moves.

Least favored nation

American cloud companies that have tried to do business in China have faced a long, bumpy road over the last decade. Chinese data laws essentially reduce foreign companies like AWS and Microsoft to glorified resellers, requiring them to license their brands to local companies that actually operate their data centers in China.

And Chinese government policies strongly encourage domestic businesses to use homegrown cloud computing companies like Alibaba, Huawei, and Tencent. For the most part, that limits the use of the U.S. cloud providers in China to multinational conglomerates based outside the U.S. that already work with AWS or Microsoft and want to have a local operation in China.

However, this week the Biden administration signaled that it's ready to enact barriers of its own around American cloud companies. U.S. regulators want to require that AWS, Microsoft, Google, and others providing cloud services get permission from the federal government before allowing Chinese companies to purchase AI services from their data centers, according to the Wall Street Journal.

  • The details about the proposal are quite vague, which suggests the administration just launched a trial balloon (but not a weather balloon) seeking feedback from the industry.
  • The U.S. has moved aggressively over the last year to restrict the sale of advanced AI chips from Nvidia and other companies to Chinese customers.
  • Now regulators are worried that those companies could bypass those restrictions by renting GPU capacity from the U.S. cloud providers, which are buying as many of those chips as they can amid the generative AI boom.

The Chinese versions of AWS and Microsoft are not selling access to state-of-the-art GPU cloud services.

And there are already a lot of hurdles facing Chinese companies that want to buy cloud services outside of China.

  • It's not clear whether Chinese companies that want to use data from Chinese citizens or businesses in machine-learning activities can do so in data centers beyond China's borders, according to the 2021 Data Security Law.
  • Real-time prediction applications using machine-learning servers in the U.S. probably won't work inside China due to latency problems.
  • U.S. cloud providers are also very attentive to any use of their servers by foreign actors in cybersecurity contexts.

It's unlikely that there is a significant amount of AI spending by Chinese companies on cloud infrastructure services run by U.S. companies.

  • But any U.S. order to restrict the sale of cloud services could increase the pressure on other countries to further the reach of their own data-localization laws, which make life in general much harder for cloud companies.

Sometimes a notion

Runtime subscribers already had a chance this morning to read our latest story on Notion's attempt to chip away at the dominance of Atlassian's Jira as the foremost tool for managing software development teams, thanks to a production error. But in case you subscribed today, or marked all your morning emails as read in hopes of achieving inbox serenity, here are a few highlights.

"People live their life in so many different apps and different (types of) software; that is quite unproductive." said Akshay Kothari, co-founder and chief operating officer at Notion. "I think the value that Notion brings is not that it's feature by feature better than Jira. The value that Notion brings is that the context of the projects you work on (and) the context of the tasks you are assigned to is right there in the same product."

Jira has been around for decades, and has succeeded by trying to be the best issue-tracking software it can be and integrating with all the other tools needed to run a software team, said Megan Cook, head of product at Atlassian for Jira. The dueling approaches highlight the long-running enterprise software debate between using the best tools and stitching them together yourself, or buying one tool that gets the job done but might not compete feature-for-feature with a specialist tool.

Enterprise moves

Adam Gross is the new interim CEO at Vimeo, after Anjali Sud resigned to pursue a new opportunity.

The Runtime roundup

OpenAI's GPT-4 model is now generally available to developers that have already been working with OpenAI, with spots for new developers coming later this year "depending on compute availability."

Digital Ocean acquired Paperspace, one of the many specialized GPU cloud providers gaining traction this year, for $111 million as the boutique cloud makes a generative AI move.

Microsoft Azure customers suffered delays and outages in Western Europe after severe weather in the Netherlands took out a fiber-optic link Wednesday.

TikTok maker ByteDance released ByConity, a Snowflake-like cloud data warehouse architecture, as an open-source project.

Oxide Computer shipped its first rack server last week, after being profiled back in 2020 by yours truly as an attempt to bring state-of-the-art cloud hardware to the on-premises data center.

Thanks for reading  — see you Saturday!

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