Amazon will open London datacenter by early 2017

The move will "provide ... strong data sovereignty to local users," Vogels wrote in a blog post.

Data sovereignty -- or which country has jurisdiction over data -- is a hot topic in the European Union, where the processing of citizens' personal information is subject to strict data protection laws.

Those laws require that personal data sent outside the EU be given the same legal protection as at home. Exports of data to the U.S. were, until recently, simplified by the Safe Harbor Agreement, under which over 4,000 companies certified they would respect EU regulations when processing EU data in the U.S.

With the striking down of the Safe Harbor Agreement by the EU's top court last month, many of those companies were cast into a legal void, frantically trying to put alternative legal mechanisms into place to continue their business.

Amazon Web Services wasn't among them, though: Although it had registered under the Safe Harbor Agreement, it also had a Plan B: It had incorporated model clauses into its contracts with customers, providing them and their customers the same guarantees on the privacy of its data processing, and had the clauses approved by EU privacy regulators.

Alternative legal mechanisms protecting data exports, such as model clauses in contracts with customers, binding corporate rules between entities in the same group, or even asking for the informed consent of the person whose data is processed, have the support -- at least for the time being -- of the majority of EU data protection authorities.

However, German regional privacy regulators have cast doubt on the legality even of those mechanisms, suggesting that they do not provide the privacy protections required under EU law when data is moved to the U.S. They said last month that they would authorize no new data transfers under the alternative mechanisms, and called for Europeans' data to be kept in Europe.

So, there are strong legal reasons why AWS might want more datacenter capacity in Europe in the near future.

But just as important is the issue of performance. The EU has a larger online population than the U.S., and hosting more applications closer to them will improve their latency, the time a message takes to make the round-trip to the datacenter and back.

Latency is particularly important in financial markets, where millisecond delays can affect the profitability of trades. AWS already has data centers around Frankfurt, close to Germany's trading hub. Putting servers closer to the London financial center also makes sense.

A number of local organizations will benefit: AWS says its customers include the BBC and other local broadcasters; music-identifying-app Shazam; the U.K.'s national rail timetable service, and Unilever.

AWS announced the London center rather early -- perhaps to address the Safe Harbor question -- as on Thursday it announced a new data center region in South Korea to open early next year. The company is also adding a region in India and a second one in China, in addition to the regions it already has in the U.S.

Of course, AWS isn't the only global cloud provider taking an interest in Europe. Microsoft hosts Azure operations at data centers in Ireland and the Netherlands, while Google operates data centers in Belgium, Finland, Ireland and the Netherlands.