Legal issues in the Cloud - Part 4

Data exit from the Cloud

One of the remaining key issues Cloud users need to consider relates to the notion of being locked-in to certain applications or systems — and if a user wants to transfer data or applications from the Cloud, whether the data is portable between service providers. In these circumstances, a user will need to consider its requirements to access data some years into the future for a plethora of regulatory reasons.

Backup of data may well require the applications which created the data to be available in order to sensibly access it. This may be readily achievable if complete system backups and perpetual licences to applications allow a user to rebuild a system so as to restore data. In a Cloud setting, rebuilding an application years later so as to make data intelligible may be impossible — and yet that is precisely what organisations might have to be able to do in order to remain compliant with data retention laws and regulation. All records, whether electronic or not, should be retained for at least the minimum period stated in any applicable statute or regulation. In Australia there are more than 80 acts of legislation, regulations and rules specifying document retention requirements applicable to companies under Australian law. Depending on the situation data needs to be accessible for five, seven or 10 years after creation.

If a court orders a company involved in litigation to make available records from six years ago excuses such as “the Cloud ate my data” simply won’t wash.

Such scenarios should be considered at the outset of any relationship — and give rise to questions such as:

• If service providers change, can the records be usefully accessed?

• Are there any lock-ins?
• Can data be extracted from the Cloud?

• When will data be transferred and what form will it take?

• What are the obligations on each party regarding an exit plan?

Vint Cerf, the acknowledged father of the internet, has identified the issue of moving data between Clouds as one of vital importance. He has said that developing “inter-Cloud” standards and protocols (so that data does not get caught in one Cloud) is the equivalent now of the issues faced in 1973 when networks could not communicate with each other.

As one commentator put it, one of the issues with Cloud computing is that it can work a bit like Hotel California — you can check your data in OK, but will you ever get it out? It’s clear that Cloud computing offers some compelling efficiencies and an unprecedented ability to achieve scale without heavy upfront investment. The technologies which have developed to offer these new opportunities will change the way IT services are delivered.

Read 12 questions to ask when considering the Cloud.

Vendors, users, government, members of the legal profession and industry participants generally will have to work together to allow the full potential of these new technologies to be accessed and used. Some of the issues surround development of standards and best practice in the areas of security, interoperability, escrow, data transfer and privacy. An industry focus on defining first problems and then solutions to these practical impediments to rolling out Cloud solutions will assist vendors and their customers alike.

In light of the additional layers of risk, and particularly in light of data and privacy issues, business users of Cloud services will need to very carefully consider the terms of service and associated commercial and compliance issues. For the most powerful (largest) customers — negotiating terms of contracts will be important. For those with less bargaining power a careful consideration and comparison of the trading terms of multiple vendors will be essential.

Read Part 1 of Legal issues in the Cloud.

Read Part 2 - Data sovereignty.

Read Part 3 - Due dilligence.

Mark Vincent is the lead technology and intellectual property partner and Nick Hart is a senior lawyer with Sydney based new economy law firm, Truman Hoyle.

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