Cloud Computing - Growing Trend

Gartner, the world’s leading information technology research and advisory company, predicts "the [cloud services] industry is poised for strong growth through 2014, when worldwide cloud services revenue is projected to reach $148.8 billion."  Cloud Computing extends the concept of utility computing and is often characterized by its value propositions such as "on-demand self-service" and "broad network access."  As Cloud Computing becomes a new business model, not just a new technology, it brings a new legal challenge as well as accentuating the need of due diligence regarding traditional legal issues associated with technology and outsourcing.  

There are legal issues and risks both for Cloud Service Providers and for Cloud Service Users.  This research guide places primary focus on the Cloud Service Business Users.  Further, this research guide is only a starting point for a law student or an attorney to research legal issues.  The guide also expands on issues with privacy protection and trans-border data transfer. 

Cloud Computing Defined

National Institute of Standards and Technology (NIST) issued the Definition of Cloud Computing marked as V15 on October, 2009.  NIST defines Cloud Computing as "Cloud computing is a model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction."

NIST further dissects Cloud Computing from three different perspectives: essential characteristics, service models, and deployment models.  

Essential Characteristics

• On-Demand Self-Service
• Broad Network Access
• Resource Pooling
• Rapid Elasticity
• Measured Service
  

Service Models

• Cloud Software as a Service (SaaS)
• Cloud Platform as a Service (Paas)
• Cloud Infrastructure as a Service (IaaS)

Deployment Models

• Private Cloud
• Community Cloud
• Public Cloud
• Hybrid Cloud
  

These classifications are important because different legal challenges may arise depending on the specific type of Cloud Computing services.  For example, a large business entity that procures service under the Private Cloud model may find the legal issues similar to traditional IT outsourcing engagements.  On the other hand, small and medium size businesses (SMB) may find the Private Cloud model not attractive as their volume of business may not warrant the cost associated with the use of Private Cloud. 

However, the use of Public Cloud may present a series of legal issues to SMB because most cloud service providers offer the services only  in general terms with few meaningful commitments on a "take it or leave it" fashion.  Further, when risk factors such as business disruption and regulatory noncompliance are considered, a business case may become unsustainable if it is merely focused on cost savings.

In fact, James Staten, analyst of Forrester Research, predicts the trend in 2011 which includes failed attempts to effectively use the Private Cloud model and growth of the Community Cloud driven by security and compliance.

Legal Risks and Issues associated with Cloud Computing

Connecticut Law Tribune published an article "Cloud Computing: Why Forecast Should Matter To You" in October, 2010.  The articles, such as the above, summarize some critical issues associated with Cloud Computing.

• Jurisdictional Issues

• Data Security

• Privacy & Data Protection Laws

• Contract of Adhesion 

• Costs and Pricing Model

• Maintenance and Support

• Availability and Reliability

• Disaster Recovery

• Exit Strategy
  

• Intellectual Property, Licensing

In February, 2011, Connecticut Law Tribune also published an article "E-Discovery: Cloud Computing Complicates E-Discovery Issues" to expand on how Cloud Computing brings up significant challenges as to how and where Electronically Stored Information (ESI) resides.

• Electronically Stored Information (ESI)

• E-Discovery
  

Further, lawyers must understand the ethical obligations when practicing in the Cloud world considering the ABA's opinion.

• Ethical Obligation

Outline of this Library Guide

Primary Sources tab

• U.S. Constitution 
• U.S. Codes that may govern the use of Cloud Computing services
• Administrative laws
• State-law implication
• U.S. Case laws that dealt with the Cloud Computing related issues

Secondary Sources tab

• U.S. Resources 
  • The secondary sources that discuss applicable U.S. legal issues
  • Blogs and other resources
• International Resources
  • The secondary sources that discuss International legal issues with focus on privacy and data protection laws
  • Information about relevant International organizations

News and Media tab

• Reference legal news articles
• Reference business & technology news articles
• RSS Feeds
  

Maki DePalo is a second year student at Georgia State University College of Law.  She is expected to graduate in May, 2012.

Please note this guide should not be considered as legal advice or as a legal opinion on any specific facts or circumstances.  If you need further assistance in researching this topic or have specific legal questions, please contact a reference librarian in the Georgia State University College of Law library or consult an attorney.