The Korean computing industry’s reaction to President Moon Jae-in's declaration of "data economy" on August 31 was cold. Industry watchers said the announcement came too late. They said the government should have started to ease the regulations on personal information use and to encourage public agencies to use private-sector cloud computing services at least four to five years ago.
Cloud computing refers to the practice of using a network of remote servers hosted on the Internet to store, manage, and process data, rather than a local server or a personal computer.
Cloud computing allows an organization to borrow information and communication technology (ICT) resources such as servers and storage devices as much as necessary. It constitutes a basis of the Fourth Industrial Revolution and it is an area where Korea is particularly weak. Experts point out that there is no player to lead the industry not to mention the soil and market for the industry to grow.
In 2010, the U.S. began moving the federal government’s databases to private-sector cloud services. It was intended to help domestic companies build performance while reducing data management costs. The Korean government managed data on its own for personal information protection and security. Private cloud service companies have been turned away as they are "not verified."
According to statistics of the Organization for Economic Cooperation and Development (OECD) last year, only 12.9% of the domestic companies with 10 or more workers use cloud services. It is half of the OECD average of 24.8%. If the target is expanded to all companies, the utilization rate plummets to 4.1%.
That is why the cloud service industry and market did not grow properly. The domestic cloud service market is expected to reach 1.9 trillion won (US$1.5 billion) this year. It is less than one-hundredth of the global market, which is estimated at US$186 billion (about 207 trillion won).
"It is hard to find a place to invest in Korea," said a CEO of a securities company. "The government's lax attitude and market indifference have killed the cloud service industry."