SAN FRANCISCO/SEATTLE - This spring, Taser International Inc won a small but high-profile contract to supply body cameras to the London police. But the deal nearly collapsed over one issue: where the video footage would be stored.
In the end, the deal survived only after Taser dropped Amazon.com Inc as the data storage provider for the year-long project. The fact that Amazon did not have a data centre in Britain was a deal breaker for British officials, according to Taser.
The case is an example of the challenges that Amazon faces as it works to expand its cloud computing business, known as Amazon Web Services (AWS). In cloud computing, clients store and process data on remote servers accessed by the Internet, as opposed to storing information in local servers.
Since Edward Snowden exposed the vast reach of the US National Security Agency's surveillance programs 18 months ago, government agencies and companies around the world have been evaluating where they keep their most sensitive data.
Some larger companies have grown wary of relying too heavily on Amazon's public cloud servers, preferring to store data on their own premises or work with cloud providers that can offer them the option of dedicated servers - the so-called "private cloud" model, technology consultants say.
That has opened a door for rivals such as Microsoft Corp, which has won over some companies by giving them more direct oversight of their data in the cloud.
"Edward Snowden did more to create a future with many clouds in many locations than any tech company has done," said Steve Herrod, the former chief technology officer of VMware Inc, now a venture capitalist at General Catalyst Partners.
A web of new laws restricting how data can move across national borders creates another hurdle for Amazon, the largest US online retailer.
Amazon "must be definitely more localized," said Gordon Muehl, chief technology officer of security for German business software maker SAP.
For now, Muehl said he does not expect SAP to work with Amazon on many upcoming projects due partly to data-location issues.
Amazon said demand for AWS, including in Europe and Asia, has never been stronger, and that any contracts lost to rivals are the extreme exception, not the rule.
The company plans to build data centers in every large country over time, according to AWS chief Andy Jassy. But doing so will take time and incur considerable expense, analysts said.