Greek crisis is cutting off access to international Cloud services

If you are going to run your country broke then you probably want to be using Cloud services inside your borders. As the Greek crisis rolls on, in the past week, strict capital controls have been put in place that basically block bank transfers and credit card payments outside of the country. For a relatively high-tech country this poses a major problem as consumption of Cloud services is relatively high. Unlike the Iceland crisis of 2008, Greece is highly-reliant on external Cloud services.

Ed: Thanks for the head’s up on this one Phil.

Greek startups felt the impact in a big way when capital controls put in place by the government prevented them from accessing cloud services outside the country. Specifically, the government prohibited any money transfers outside Greece without approval from a Ministry of Finance commission. That included, for example paying for infrastructure services like Amazon Web Services. One could argue that it was akin to the government shooting themselves in the foot, while tying the hands of these young companies. – Source

So far the stories, of which there are few, are rotating around the impact on start-ups. What we aren’t hearing or seeing, yet, is the impact on large companies and government itself, who are also reliant on Cloud. Nor are we seeing the impact of this on every day citizen’s usage of Cloud services. Though it will be coming as this article rather ominously reports.

Some Apple Inc. customers in Greece started to experience a disruption to service Tuesday as controls on the movement of money began to grip the indebted nation.

“On June 30, we tried to charge your account for your iCloud space of 20GB, but there is a problem with your payment details,” said one e-mail received by Bloomberg News staff based in Athens. “If we don’t manage to renew your subscription, your account will be downgraded to the free 5GB space program.” The user has a standing monthly payment for a 0.99-euro-cent ($1.11) payment for the storage service. – Source

This interruption is increasingly significant the longer the controls remain in place. Worse, if Greece ends up with junk money, as some have predicted, actually being able to afford Cloud services may be impossible. With over 4,000 Cloud services in the market today, the disruption will be high.

Greek companies that are reliant on Cloud will be in crisis mode now. These controls have had the, probably, the unintended consequence of dropping a bomb on all of Greece’s internet connections.

The problem demonstrates a hidden risk in today’s otherwise efficient vertical disintegration. Taking for granted the easy flow of money across borders, system designers never foresaw a situation in which companies with adequate funds would find that they couldn’t pay foreign vendors.

“Greek companies are not able at this moment to pay for hosting (Amazon), storage (Dropbox), email services (MailChimp) and many other services,” says Jon Vlachogiannis, a Bay Area entrepreneur, in an email. Without these services, otherwise viable businesses are in trouble. – Source

We’ll be keeping an eye on this as it develops. While some companies may extend credit to Greek users, you can understand they will be very nervous about doing that given that the country’s finances are incredibly unstable. As time rolls on, this could cripple Greece’s government and economy far more effectively that austerity measures every could.

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