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age of instability

Among Sun Tzu’s many quotable maxims in The Art of War, he posited that in the midst of chaos, there is also opportunity. Global Relay Communications Inc. is taking that sentiment to heart with a major expansion into Britain and Europe.

The Vancouver-based data archiving company is in the process of opening new offices in London that will see total staff increase by 50 per cent to nearly 700 over the next two years. The move is being driven by the opportunities arising from the chaos of Brexit, and also by a growing global distrust in U.S. government data policies.

While some Canadian companies are skittish about locating in London because of Brexit, Global Relay chief Warren Roy jumped in because property was affordable.Mark Bates

“It helps us, without question,” Global Relay founder and chief executive officer Warren Roy says of wariness of the United States. “European companies, if they had their choice, would prefer to store their data in Canada than in the United States.”

Global Relay, founded in 1999, offers archiving of e-mail, website, messaging and other data-based services. The company also provides surveillance, monitoring and discovery services for that data, which allows users to find “bad behaviour,” Mr. Roy says.

Banks, hedge funds and stock exchanges are among the company’s main customers, as they use those monitoring services to stay onside of regulatory requirements. Most of Global Relay’s customers have been U.S.-based, but there’s now growing demand in Europe – particularly in Britain and France – as stronger privacy laws are being enacted.

This summer, for example, the European Union’s General Data Protection Regulation came into effect. The legislation gives individuals more rights over how their personal data is used and stored. It also puts restrictions on how that information can be exported to countries outside the European Union.

The rules were partly inspired by revelations that the National Security Agency and other U.S. authorities were accessing user data, as well as growing ill-ease with how U.S. companies such as Facebook and Google are using information.

Canada is seen as having tougher privacy protection than the United States, which means it has stricter rules governing how governments and corporations can access individuals’ data, and is therefore seen as a safer place to store information.

Companies selling cloud services based in Canada thus have at least one competitive advantage over southern counterparts, especially given the unpredictability of the current U.S. administration.

“There’s a widespread perception that there’s no prospect of things improving [in the U.S.] any time soon,” says Andrew Clement, professor emeritus in the faculty of information studies at the University of Toronto. “Indeed, things are heading worse if you’re talking about an era of instability.”

Brexit is also proving to be a boon for Global Relay. The company was able to acquire 38,000 square feet of office space in the heart of London, between St. Paul’s Cathedral and the historic Bank of England building, on favourable terms because of the continuing uncertainty over Britain’s pending divorce from the EU.

“It’s a pristine location because no one wanted to take it. In normal times, we never would have been able to get the lease,” Mr. Roy says. “Brexit caused such mayhem that no one was interested in making real-estate deals.”

The move runs counter to a growing exodus from London. A third of European companies plan to cut investment in Britain while more than one in 10 plan to pull out completely, according to a survey released this summer by Swiss bank UBS.

Unilever, HSBC and Panasonic are among the companies that have so far announced plans to move operations to other cities in Europe.

Global Relay, however, is following Sun Tzu’s advice. “We looked at Brexit as the time to strike,” Mr. Roy says. “That’s usually the best time to make an investment, when everything is going bad.”

The approach netted the company, which posted revenue of more than $100-million last year, special leadership recognition in Deloitte’s annual Fast 50 rankings, announced this month.

“Global Relay is now positioning themselves as a global provider with this expansion,” says Erica Pretorius, partner in risk advisory at the professional services firm. “Where other people are seeing risk, they’re seeing opportunity. That’s something a lot more companies need to look at.”

Security experts point out that storing user data in other countries is a good step to taking advantage of global uncertainty, but it may not be enough to keep information secure. With much of the world’s internet traffic unavoidably routing through the United States, it’s still possible that data can be accessed by U.S. agencies.

“They have to worry about interception en route,” Mr. Clement says. “Encryption doesn’t solve all your problems.”

Global Relay is planning to build a pair of data centres in Europe to help further obviate that issue, but uncertainty is affecting the timeline on that further expansion. The company won’t decide where to put its centres until Brexit is resolved.

“We’re sitting on it,” Mr. Roy says. “We want to see how this ends.”