EU's Data-Protection Reform Should Inspire U.S

"I do encourage cloud computing centers in Europe. We needmore technology, more innovation and more investment in the ICTindustry," Reding said in prepared remarks for a speech inBrussels. "However this cannot be the only solution. We need freeflow of data between our continents. It doesn't make much sensefor us to retreat from each other."

Deutsche Telekom AG's T-Systems information innovation unitis pushing regulators to introduce a certificate for German orEuropean cloud operators to help companies shield data from U.S.government access through the Patriot Act. Some of thesurveillance powers of the act, passed afterwards the Sept. 11, 2001,terrorist attacks, have been opposed by lawmakers and outsidegroups, including civil liberties activists.

The commissioner last year proposed an overhaul of the EU's16-year-old data-protection policies to address onlineadvertising and social-networking sites. The bill, which the EUregulator will formally propose by the end of January, willinclude stricter sanctions and equip national data-protectionauthorities with powers to levy administrative sanctions of asmuch as 1 million euros, or 5 percent of acompany's annual sales, according to the latest draft, a copy ofwhich was obtained by Bloomberg News.