The stopping of this service could have been prompted by the massive losses that the service incurred, with one German publication, Handelsblatt, reporting back in March that the Windows manufacturer has been set back by more than €100 million (A$162 million).
Microsoft said in its blog post that the reason for winding up the Deutsche Telekom service was because "customers’ needs have shifted, and the isolation of Microsoft Cloud Germany imposes limits on its ability to address the flexibility and consistency customers desire today".
The setting up of the Deutsche Telekom deal was prompted by data security fears; at the time, in the wake of the revelations about blanket NSA surveillance by whistleblower Edward Snowden, many American firms had looked to set up European operations to provide cloud services in order to satisfy the privacy demands of likely European customers.
The case ended when a new law, the CLOUD (Clarifying Lawful Overseas Use of Data) Act, signed into law by President Donald Trump on 23 March, made the case moot. The Act changed US law so that law-enforcement warrants would henceforth apply to data stored anywhere by US-based tech firms.
This meant that the one feature sought by foreign companies — not to have their data at the beck and call of the American Government — would no longer be available if they chose to use the cloud services of a US firm.
When Microsoft announced the deal with Deutsche Telekom, it was organised in such a way that Microsoft itself would have no access to the data unless permitted to do so by the data trustee. That trustee was German company T-Systems, a subsidiary of Deutsche Telekom, which would hold the keys, both logical and physical, that controlled access to customer data.
The file sync and share company Nextcloud said a major reason why Microsoft had lost money on this service was due to poor security. Quoting the Handelsblatt report, Nextcloud said the Telekom cloud solution was “over-priced, under-performing and unpopular with customers”.
Plus, Handelsblatt said, "extra security turned out to be a real hindrance to doing business. Companies who wanted to establish secure information links to Asian subsidiaries or overseas databases were hit with delays and crashes. Servers went down regularly, system updates were often impossible. And all this for a service which cost 25% more than ordinary cloud computing".
Nextcloud has a dog in this fight as it provided cloud services to the German Federal Government.
Comment has been sought from Microsoft.