The Morning Download: U.S. Tech Firms Increase Dominance of Cloud Market in Western Europe

Good morning. Three years after Edward Snowden's revelations of mass surveillance sparked a European backlash, U.S. tech companies have increased their dominance of the cloud market on the continent. Despite a series of legal cases and a wave of tighter regulation, "the top four providers of cloud infrastructure in Western Europe are all U.S. firms, and they have expanded their market share by a third in the region, hitting 40% in 2015, according to market researcher IDC," the WSJ's Sam Schechner writes.

Amazon.com Inc., Microsoft Corp., Alphabet Inc.'s Google and International Business Machines Corp. nearly tripled their combined cloud-infrastructure revenue in the region to $2 billion, while their European rivals increased share by 86%, the WSJ says. U.S. tech companies responded to the new rules by building more data centers in Europe, so clients can keep their information in the region.

"On paper, European companies should be poised to take advantage of this growth. But they are less nimble," Jonathan Atkin, a senior analyst for RBC Capital Markets, told the WSJ. Initially, the Information Technology & Innovation Foundation estimated that the fallout would cost American cloud firms between $21.5 billion and $35 billion globally over three years, the WSJ notes.

Intel's Kim Stevenson says CIO experience led way to operating role. Intel Corp.'s Kimberly S. Stevenson, who just completed a four-year run as the company's CIO, says her recent experience has helped prepare her for a new role as an operating executive. On Monday, she became COO of the combined client computing and IoT group, which last quarter generated $7.87 billion of Intel's $13.5 billion in revenue.. "The benefit of coming from IT, is that we tend to look across the company, as IT people. I will be able to look horizontally," she tells CIO Journal.

Telstra CIO steps down. After less than two years on the job, Telstra Corp. Chief Information Officer Erez Yarkoni is leaving the Australian company, a company spokesman confirmed. Mr. Yarkoni, who has led the telecommunications giant's cloud business since 2013, will remain in the top IT spot until October. A replacement has yet to be named. The move comes weeks after Telstra's chief operations officer, Kate McKenzie, announced her departure after a dozen years with the company. In May, the company fired chief technology officer Vish Nandlall, amid allegations that he falsified parts of his resume.

SECURITY AND PRIVACY

U.S. considers classifying election system as 'critical infrastructure.' The heightened concerns about cybersecurity surrounding U.S. elections come as attacks have targeted various arms of the Democratic Party.  Buzzfeed reports that Homeland Security Secretary Jeh Johnson Wednesday told reporters that the move would trigger more cyber investments from DHS and make the system an agency priority. But much coordination would need to happen first between the DHS and the more than 9,000 states, cities, counties which have authority over voting, he said. White House spokesman Josh Earnest tells the WSJ's Kate O'Keefe and Byron Tau that other members of the president's national security team have also discussed the idea mentioned by Mr. Johnson. Mr. Earnest said it is difficult to make a general comment about the current threat level, given that the nation's election infrastructure ranges from paper ballots to electronic machines.

Apple does differential privacy. Privacy advocates hope that other technology companies will follow Apple Inc.'s lead in using differential privacy, decade-old technology that can analyze pools of user-generated data, but without learning much about each user's contribution. The company last week said it has built differential privacy into its upcoming iOS and hopes to track user trends. MIT Technology Review explains that the version Apple is using adds noise to data before it is transmitted. "Its data scientists can still examine trends in how people use their phones by accounting for the noise, but are unable to tell anything about the specific activity of any one individual."

New techniques used to target business email. Cyber criminals who once pretended to be executives directing subordinates to transfer money are now using new techniques, including malicious software to break into email systems and redirect the payments. Security company SecureWorks Inc. says such scams are known in Nigeria as "wire-wire" and are openly discussed in songs and online discussions. A Facebook group calling itself "Wire wire zone" offers to connect scammers with money mules who will transfer funds. "It's an open bazaar for money laundering," Joe Stewart, a director of malware research with SecureWorks, tells the WSJ's Robert McMillan.

EMERGING TECHNOLOGY

Scientists harness quantum physics to build a programmable computer. Scientists are making strides in applying quantum mechanics to create devices that one day may put today's laptops and servers to shame. The WSJ's Daniela Hernandez reports that researchers at the University of Maryland in College Park built a new device that combines magnets, lasers and five individual ions, or charged atoms, trapped in single file. The team used the mechanism to run three different basic algorithms, including a primitive version of the algorithm that underlies encryption technology. Government organizations, academic labs and companies like Alphabet Inc. are investing millions on developing so-called universal quantum computers that could execute any program without tweaking the hardware on which that software runs.

Baidu bringing AR to the masses. China's Baidu Inc. may be on the cusp of rolling out the "first truly intelligent augmented reality experience to a mass audience." MIT Technology Review reports that the system, called DuSee, marries computer vision and deep learning to add extra information for smartphone toting users. The platform will be baked into many Baidu apps, including its mobile search software.

MORE TECHNOLOGY NEWS

Wal-Mart in talks to buy web retailer Jet.com. A deal would give the retail giant access to Jet's sophisticated pricing software, as well as warehouses and valuable customer data, the WSJ's Greg Bensinger and Sarah Nassauer report. Started by Diapers.com founder Marc Lore, Jet has hoped to challenge Amazon.com Inc. by offering lower prices based on a formula that takes into account basket size and the proximity of the merchandise to buyers, as well as other factors. The startup, barely a year old, has drawn more than $500 million in capital.

Apple says latest group of hires is more diverse. Apple Inc. Wednesday reported small increases in the share of women and minorities working at the tech giant, the WSJ's Georgia Wells reports. Apple said the share of Hispanics among its 80,000 U.S. workers grew to 12% in June, from 11% a year earlier; blacks accounted for 9% of the U.S. workforce, up from 8% a year earlier. Women are now 32% of Apple's 125,000-person global workforce, the company said, up from 31% a year ago. Critics say Apple is more diverse than rivals like Facebook Inc. and Google, because much of its workforce are lower-paid workers in retail, the Washington Post notes. "But Apple's gains this year did not come exclusively from retail. There was a 1 percent increase for women and blacks in technical jobs."

Intel recalls smartwatches. Intel said it is recalling all Basis Peak smartwatches because of overheating issues, a setback for the chip maker's high-profile embrace of wearable technology, the WSJ reports. Intel acquired the product line through the March 2014 purchase of San Francisco startup Basis Science Inc.

Moon startup scores regulatory coup. The Federal Aviation Administration has signed off on startup Moon Express Inc.'s plan to send a tiny, unmanned scientific spacecraft to the surface of the moon in the second half of 2017. Even if the pioneering flight proposed by the Northern California company is delayed, scrubbed or fails, the achievement in breaking through what had seemed a bureaucratic logjam may help smooth the way for private space missions envisioned by other companies, the WSJ's Andy Pasztor reports.

Hewlett-Packard's Whitman backs Clinton. Hewlett Packard Enterprise Chief Executive Meg Whitman, a politically-active Republican who once ran for governor in California, said she would support Hillary Clinton, the Journal's Don Clark reports. In a tweet Tuesday she criticized GOP candidate Donald Trump for taking what she called reckless, uninformed positions on the economy, immigration, the economy and foreign policy.

EVERYTHING ELSE YOU NEED TO KNOW

The Bank of England cut its main interest rate to 0.25% from 0.5%, marking a low in the central bank's 322-year history. (WSJ)

The rice cooker has become a test of China's ability to fix its economy as the country now hopes to produce more high-end goods to sell domestically. (WSJ)

Australia's conservative government has told its main science body to again focus on climate research, after earlier cuts in the area drew international criticism. (WSJ)

Officials in Miami-Dade County, Fla., plan to begin aerial spraying of insecticides in and near a section of Miami that is home to the continental U.S.'s first known cases of Zika virus transmitted by mosquitoes. (WSJ)

Tom Loftus contributed to this article. The Morning Download comes from the editors of CIO Journal and cues up the most important news in business technology every weekday morning. Send us your tips, compliments and complaints. You can get The Morning Download emailed to you each weekday morning by clicking http://on.wsj.com/TheMorningDownloadSignup.


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