Contracts for Clouds: Comparison and Analysis of the Terms and Conditions of Cloud Computing Services

Networks, the Internet, and Cloud Computing and Cloud Computing

Article Snapshot

Author(s)

Simon Bradshaw, Christopher Millard and Ian Walden

Source

Working Paper, Centre for Commercial Law Studies, Queen Mary, University of London, September 2010

Summary

This study looks at the terms of contracts between consumers and cloud computing services.

Policy Relevance

The provision of cloud services and the interpretation of contracts is complicated by the fact that services can easily be provided across borders. Consumers should consider contract terms carefully.

Main Points

  • Cloud computing, typically offered to many consumers and relying on the Internet as platform,  differ from traditional computing in that the consumer is not always aware of where their data is stored. Cloud computing is flexible, and features of the service may change rapidly.
  • Advantages of cloud computing include reduction of costs because consumer firms spend less on information technology; services can be considered more “green” because the cloud provider’s infrastructure and its environmental impact can be centrally controlled.
  • This paper surveys 31 cloud services offered by 27 different firms in United States and European markets, some offering paid and some offering free service.
    • Different types include “software as a service” (Saas), “platform as a service” (Paas), and “Infrastructure as a service” (Iaas).
    • Customers served varied from individuals to small and large firms.
  • Common contract terms include:
    • Terms allowing providers to close inactive unpaid accounts.
    • Choice of law clauses, specifying that disputes should be settled using the law of a particular state in the United States or a European country. Most use their principal place of business.
    • Arbitration clauses.
    • Clauses that describe how and when contract terms may be changed.
    • Clauses that limit liability, direct or indirect.
  • Terms that often vary include those concerning obligations to store and back up data, what happens to data from closed accounts, data disclosure to authorities, and whether the service provider claims intellectual property created using the service.
  • Surprisingly, few contracts offer assurances that data will be stored in a particular location, such as in the United States.

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