I'm having a really hard time trying to stomach anything Tim Berners Lee is saying these days, when I know he's such a big proponent of bringing DRM to his "open web" (and inevitably turning it into a more "closed" one, in the end).
Also, isn't this decentralization? Not having the data in one mega-American-cloud? Seems to me that Tim is doing a lot of PR for big companies lately, masked as a benefit for the users, just like he's doing with the whole DRM thing, which he actually says would be beneficial for users.
But let's assume he's not trying to be malicious here, and that he has a point. Here's the thing. Yes, I agree that having every country demand companies to host the data locally is going to make it very hard for innovation to spread, and therefore, progress will slow.
HOWEVER, right now it seems we only have a choice between this, and allowing US to get their hands on all the data. I didn't even see Obama mention anything about NSA not being able to tap the world's fiber cables anymore.
So until US gets serious about not doing shitty stuff like that to the world's users, then I absolutely think all the other countries should try to force companies to host the data locally.
There is one other solution to this, that will allow companies to keep the data wherever they want, and that's encrypting everything by default, and even them not being able to decrypt the data without the user allowing it. So stuff like OTR for chat systems, DarkMail/PGP for e-mail systems, and so on.
Make it so the web is completely trust-less, so other countries don't have to trust Google or the American government to not get their data, because they could be assured there's nothing for them to get other than strongly encrypted data.
Unfortunately, this option isn't even on the table right now with the big companies, and the US government will push against companies trying to do this, too. And the only way to get this option on the table, is for them to think that other countries are going to inevitably force them to store the data locally, and build data-centers locally. Only then they might start preferring this "encrypt everything with the user having the key" solution, as an alternative to storing data in every country or region.
So until that happens, I absolutely support countries demanding data to be stored locally, because I know that minutes before that will begin to happen, US companies and the US government will agree to letting the data be fully encrypted and trustless. But not any sooner than that. So in the end, we'll get what we want, and the Internet will be safe.