International Law – Clouds may bring stormy weather
There are some interesting issues being raised with regards to cloud computing, privacy, legal issues and international boundaries. These all must be taken into consideration before a business chooses to shift an IT outsourcing option. In his post Cloud Computing and International Law related issues, Di Martino (2011) raises some issues to be considered before a business chooses cloud IT services.
Some of these such as privacy, and security have been already been addressed by several others. In her post “Small International Business-Cloudy forecast” Verena raised an excellent point with regards to jurisdiction and difference in policies and laws governing storage and transfer of data in other countries, using China as an example. Should a country that censors internet choose to develop independent data storage center it begs the question as to how safe and private is data for those who chooses to use these centers and who may be accessing stored data in the name of “national security”.
Di Martino listed several other considerations for businesses including;
1) location – Where data is stored at a given time and law that governs the contract and settement of disputes. “the customer may or may not be able to control this issue by contract as the applicable law in some jurisdictions can prevent the application of the relevant contractual provisions”
2) Legislation and Reulatory – Strict rules on defence, health and financial services vary across jurisdications and directly impact cloud computing. Restrictions and regulatory provisions concerning transfer of data across borders and export and trade restrictions may impact where data can or cannot be stored.
3) Data retention for tax purposes – Businesses are required to keep data for legal and tax purposes longer than some cloud services offer.
(Di Martino, January 15, 2011)
It is imperative a company, particularly one that deals internationally, to carry out due diligence and consider the location(s) of a cloud vendor as a crucial step in mitigating risk (Di Martino, 2011) and therefore careful consideration should be given to the above issues. Should a company wind up in a unforeseen legal issue regarding any of the above reasons, this would come as a very expensive indirect cost to an outsourcing strategy.
Di Martino, M. (January, 15, 2011). Cloud Computing and International Law Related Issues [Web blog message]. Retrieved from http://www.internationalcommerciallawblog.com/2011/01/cloud-computing-and-international-law-related-issues/Posted in: Week 08: Files in the Cloud