Amazon to Launch Web Hosting in Germany--Update

By Ellen Emmerentze Jervell, Chase Gummer and Stephan Doerner 

FRANKFURT-- Amazon.com Inc. on Thursday said it would launch web-hosting services in Germany, pushing deeper into a country that has been openly hostile to U.S. Internet firms.

Andy Jassy, Amazon's senior vice president for web services, said the company would open a new data center near Frankfurt to handle growing German demand for its products.

The web retailer and other American Internet companies face mounting pressure from German regulators and privacy advocates to conduct more business locally. But Amazon's move also highlights a trend largely overshadowed by German criticism of U.S. web giants: Germans frequently say they fear the growing power of Amazon and Google Inc. but rank among the world's most avid users of their offerings.

Since revelations last year of spying by the U.S. in Germany, German politicians and pundits have attacked Google and other American tech companies as threats to Germans' personal freedom. German officials have pushed the European Union to limit Google's sway in markets. Senior German politicians have said Google should be broken up, regulated like a monopoly and forced to reveal secrets of its web-search algorithms. One official said Google is more dangerous than the U.S. National Security Agency.

German media have joined the chorus. The chief executive of Axel Springer SE, one of Germany's top media companies, in April published an open letter titled, "Why We Fear Google."

But those pronouncements don't resonate with all Germans, particularly young ones.

"I don't know which Germans they were referring to," said Christian Zinnack, a 23-year-old student in Düsseldorf. "Definitely not me--or any people I know."

Germany is Amazon's second-biggest market after the U.S. Google handles more than 90% of German online searches, giving it a much higher market share than it holds in the U.S.

Not all Germans are comfortable with what that usage entails. According to a June survey by Allensbach Institute, a Germany market research institute, 70% of Germans oppose companies collecting personal data and 42% express serious concern about it.

Germans staged protests in 2010 against Google Street View, the company's service offering images taken by cars diving down streets, calling it an invasion of their privacy.

Decades of state surveillance by the Nazis and the East German communists made Germans more anxious than most about personal information.

"Spying has always been a major public topic in Germany," said Jo Groebel, a media psychologist and head of the Deutsche Digital Institut in Berlin. "I wouldn't call it paranoia," he said. "But it's a deep collective experience."

He said Germans are "particularly worried" about privacy in the digital world.

A big concern to Germans is companies that acquire "government-like competencies, but aren't accountable in the same way," said Daniel Knapp, an advertising analyst at consulting firm IHS.

But Germans' worries don't necessarily affect their behavior. Research indicates Germans who express concern over Google use its services as much as those who don't express concern. To some observers, this suggests the issue arose in few Germans' minds before raised by pollsters.

"In social sciences, we try to find out: Is this really a topic when you don't ask people," said Mr. Groebel. "In the case of fearing Google, it probably isn't."

Although 70% of Germans say they're against Google collecting data, 71% also say the benefit of Google's products outweigh potential drawbacks.

Even among those who claim to be seriously worried, only 4% said they mainly see disadvantages from the data collection.

Many Germans are wary of American web companies because they are foreign, and because Germany has few successful large Internet firms. But some say the antagonism is also being stoked by German media, which see American web giant's power to attract advertising as a threat to their traditional business.

"The way that large parts of the German press write about Google and Amazon seems to me to be about as neutral as the way oil companies report on climate change, or the pharmaceutical industry on health risks, " said Justus Haucap, director of the Düsseldorf Institute for Corporate Economics.

A spokesman for Axel Springer said the German situation could be seen from many angles. "The range of views and theories on Google and other big players presented in the German media is very broad."

Axel Springer this June acquired a 20% stake in Qwant, a French search engine focused on privacy.

Write to Ellen Emmerentze Jervell at [e-mail], Chase Gummer at [e-mail] and Stephan Doerner at [e-mail]

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