Global information technology (IT) companies such as the Amazon Web Services (AWS), Microsoft (MS) and Google are stepping up their efforts to expand their business in the Korean cloud market. Global companies are expanding their business activities such as establishing internet data centers (IDCs) in order to occupy a bigger pie of the domestic public cloud market expected to be open this year, which is fueling concern that foreign companies will increase their control of the next-generation IT infrastructure market.
According to the IT services industry on March 25, Google recently joined the Korea Cloud Industry Association, and began negotiations with local telecommunication companies to establish a data center in Korea. If the global search giant has its IDC in Korea, its service speed will rise and quick action can be taken in the event of a service failure. In particular, according to Korean law, a company has to have its own data center in Korea if the company wants to make a foray into the Korean public cloud market. So Google’s move is construed as its will to ramp up activities in the public cloud sector.
"Google's share of the global market is still small compared to AWA and Microsoft and its entry into the Korean market was late, but its own AI is so powerful that it will make a big difference in the market," a Korean IT industry official said. Oracle, which began its cloud business in September 2016, also announced a plan to build an IDC in Korea last month. Alibaba of China is also planning to expand its market by recently hosting events in Korea.
AWS and Microsoft which pre-empted the Korean public cloud market in advance began to cement their leading positions in the market this year while conducting a feasibility study on the Korean public cloud market.
The Korean government is planning to increase the private cloud usage rate of public institutions such as those in the medical care and education sectors from 4.5 percent in 2016 to 19.4 percent in 2017 to 40 percent by the end of this year. The government budget for public cloud will also climb 25 percent to 500 billion won this year from 400 billion won last year.
AWS, which established an IDC in Korea in 2016, earliest as a foreign company, received an information security management system (ISMS) certificate for the first time as a foreign company in January. The ISMS certification program by the Korea Internet and Security Agency (KISA) is a system that examines whether or not enterprises and institutions are operating information protection management systems stably and gives those which passed the examination the certificate. MS, which established IDCs in two places (one each in one place) in February last year, is currently under a review for ISMS certification.
Meanwhile, Korean IT companies such as Naver, KT, Samsung SDS, and LG CNS are struggling in expanding their business because they depend heavily on the Korean market, unlike foreign companies that have already secured huge overseas markets. According to the Korea Information Society Agency, only 3.3% of Korean companies adopted cloud computing last year. KT and Naver among others expressed their will not to lose the Korean public cloud market whatever it takes after the introduction of the ISMS certification in 2016, foreign companies’ rush into the Korean market has made it difficult for them to secure the Korean public cloud market.
For this reason, some experts say that there is a need to protect the Korean cloud market. "If global companies dominate the Korean cloud market, not only the competitiveness of Korean IT service companies will be weakened, but Korea IT infrastructure equipment manufacturers and software companies will be faced with a crisis," said an official of the IT industry.