The US Federal Reserve is now examining Amazon cloud datacenters, in what appears to be growing federal oversight of the cloud industry (AMZN, GOOG, MSFT)

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• Amazon Web Services is the cloud computing arm of Amazon’s business.
• That service, and other cloud computing services like it, are facing increased scrutiny from world governments for the role they play in handling sensitive data — from Social Security numbers to bank account information.
• According to a new report in the Wall Street Journal, Amazon’s already begun hosting regulators from the United States Federal Reserve.
• Visit Business Insider’s homepage for more stories.

Amazon’s cloud computing arm, Amazon Web Services, is responsible for handling a ton of sensitive user information. 

For instance: The Capital One data breach, which exposed the personal information of over 100 million people in the US and Canada, happened on Amazon’s cloud servers. That’s just one example of dozens, if not hundreds, where Amazon’s cloud datacenters are handling sensitive personal information.

It’s no surprise, then, that the US Federal Reserve sent federal regulators to an Amazon datacenter in Virginia earlier this year, according to a new report in the Wall Street Journal. The visit was so that the Fed could examine the reliability and backup capabilities of Amazon’s cloud, given that it’s playing an increasingly important role in the infrastructure of the global financial system.

According to the WSJ report, federal regulators were “greeted warily” at the Richmond, Virginia-based datacenter. The regulators were said to have received limited access to internal data, and reportedly had an Amazon-appointed chaperone with them at all times. The visit reportedly took place back in April and marked the beginning of what the WSJ’s sources aid would be increasingly federal oversight of Amazon.

Amazon is a heavyweight in the cloud services business, where it competes with the likes of Google and Microsoft.

Read more: Jeff Bezos just sold $1.8 billion worth of Amazon shares — here’s our best guess at why

The idea behind cloud computing is simple: Instead of buying and maintaining expensive servers inside their own facilities, companies rent access to remote datacenters like Amazon’s, which stores their data and powers many of the computing processes fundamental to their business.

Consumer services like Netflix and Spotify all rely on cloud computing: When you want to, say, stream music on Spotify, a cloud datacenter somewhere housing that music is activated and beamed to your phone.  That same scenario applies to major financial institutions, like Capital One, which has made cloud computing datacenters a major target for bad actors.

Neither Amazon nor the US Federal Reserve has confirmed the report. A spokesperson for the Fed declined to comment to Business Insider. Amazon did not respond to a request for comment.

SEE ALSO: Jeff Bezos just sold $1.8 billion worth of Amazon shares — here’s our best guess at why

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