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  • CFO.com | US

The Cloud’s Legal Lining

As cloud computing grows ever more pervasive, pricing will moderate and legal and regulatory challenges will emerge, a top technology attorney says.

Is there a legal aspect to that?

Yes. Who is going to be the licensee — the entity who will need to obtain a license to use the app in a cloud-computing environment? Will it be the cloud provider, who will license the app from the developer and then authorize you as the end-user or a sublicensee to use it? Or will you be able to create or license apps and put them in the cloud? It makes a difference, because different jurisdictions have different laws with respect to intellectual property, the use of proprietary data, and the transfer of information, whether personally identifiable or not.

Imagine I want to license an app and put it in the cloud. I don’t know where that app will actually reside. I may end up buying a lawsuit in some other jurisdiction where I am unaware of the laws. Or the cloud provider may ask me to sign an indemnity that says, we’re happy to put this in our cloud, but you’re going to be liable if we get sued because somebody alleges it’s their intellectual property, or because data about a citizen of one country was moved to some other country without permission.

How great is the need for global cloud-computing standards?

There is definitely a need. With phones, if you have a Verizon Wireless phone and I have an AT&T iPhone, there are interoperability agreements between the carriers that allow those interfaces to function seamlessly. Today there are no such standards in cloud computing.

If I go to a hotel in London, it may have signed up for a cloud-based WiFi service from company X, while Reed Smith may have an arrangement whereby, when I plug into the cloud on my laptop, my connection is through company Y. There would have to be an arrangement whereby my computer can access my Reed Smith cloud-computing services through some other carrier. That does not exist today.

From a legal point of view, there are competing interests here. Consumers and cloud providers both want their services to be accessible anywhere, anytime. But a cloud provider has to be a big global player, and so there’s concern over the barriers to entry. How do you make sure you aren’t creating an environment in which there are a few players that control the marketplace? The way these things usually resolve themselves is that in the short term, there is a cry for government regulation.

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