FACT SHEET

Modified May 23, 2012

Cloud Computing

“Cloud computing” describes how computer-related services and software increasingly have been provided over the Internet and other networks since the late 1990s. Each user can access many types of applications and services on demand, regardless of the physical location of his computer. 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, accessed and updated with minimal management effort or service provider interaction. Examples of common cloud uses are e-mail, e-commerce, and mobile phone apps. The National Institute of Standards and Technology offers a detailed outline of cloud computing, and the office of the U.S. Federal Government Chief Information Officer has a video explaining cloud computing.

Overview

These issues arise in discussions of cloud computing:

Increasingly, governments and businesses are looking at moving their internal systems to the cloud to save money and simplify staying up-to-date on technology. The City of Los Angeles and the State of Minnesota have moved to cloud platforms, however, Los Angeles backed away from utilizing the email cloud for their law enforcement agencies after the technology was not able to meet their strict security guidelines. The former U.S. CIO, Vivek Kundra pushed the federal government towards utilizing the cloud with the launch of apps.gov, an aggregator of cloud services for federal agencies.

The infrastructure needed to provide adequate cloud service is large. Since the major companies that offer “platforms” serving many firms and individual users – Google, Microsoft, and Amazon – have all stated they are moving to the cloud, there are questions about how many other companies will be able to compete in the infrastructure space. However, most agree that barriers to platform and software as a service entry are relatively low.

As with any new technology, there is debate on the economic impact of the cloud: will this truly be a source of cost savings? What kind of new innovations and businesses will be created?

As data is increasingly held in a central network location rather than at the user’s premises, there is a growing debate about whether the current regulatory framework is adequate. This is particularly the case for privacy, security, and data ownership; also, as data crosses national borders in the course of traveling the cloud’s network, jurisdictional issues arise.

As more information flows over the Internet, there is a focus on encouraging the growth and use of broadband services, and on issues of “net neutrality” – that is, whether providers should be allowed to limit high-bandwidth uses in order to ensure reliable Internet access to all subscribers.

TAP Academics researching cloud computing include:

Jacques Cremer of Toulouse University, writing on the impact of the Internet on economic growth and business.

Randall Picker of the University of Chicago School of Law, looking at competition, privacy, and intellectual property in the cloud.

Neil Gandal of Tel Aviv University, writing on computer security, labor, and immigration issues.

Keith Hylton of Boston University, writing on issues relating to competition, property rights, and other “ground rules” online.

Daniel Spulber of the Kellogg School of Management, writing on consumers, electronic commerce, and broadband competition.

Jonathan Zittrain of Harvard Law School, looking at the Internet’s effect on privacy, security and free speech issues.

"Invoking the current mania around cloud computing, where things your computer used to do now happen online, a new class of companies are promoting cloud labor. It could create efficiencies and opportunities that economists hitherto could only dream of. It could also usher in a new era of digital sweatshops." From his article “Work the New Digital Sweatshops,” Newsweek Magazine, 12/8/2009

These sources are a good place to start in understanding cloud computing issues. Christopher Yoo offers an overview of cloud computing technology and its economic implications in “Cloud Computing: Architectural and Policy Implications.” In “Cloud Computing and Electricity: Beyond the Utility Model,” Eric Brynjolfsson and his colleagues compares services provided by cloud computing firms to those provided by electric utilities. Jonathan Zittrain’s op-ed “Lost in the Cloud” raises concerns about storing personal files on the Internet. Marco Iansiti’s paper “Six Years Later” reviews Internet-based platforms and services against antitrust decrees based on software utilized on individual systems. Peter Klein outlines familiar economics ideas that help one understand how technology has changed the economy in “Does the New Economy Need a New Economics?” In “The Economic Consequences of the Diffusion of Cloud Computing,” Federico Etro discusses the expected effects of the spread of cloud computing on macroeconomic growth.

Recent Developments

In December 2011, the Federal Chief Information Officer Vivek Kundra created the Federal Risk and Authorization Management Program (FedRAMP). The government wide program provides “a standard approach to security assessment, authorization, and continuous monitoring for cloud products and services.” The program’s goals include:

Accelerate the adoption of secure cloud solutions through reuse of assessments and authorizations.

Increase confidence in security of cloud solutions.

Achieve consistent security authorizations using a baseline set of agreed upon standards to be used for Cloud product approval in or outside of FedRAMP.

Ensure consistent application of existing security practices.

Increase confidence in security assessments.

Increase automation and near real-time data for continuous monitoring.

Recent hearings on cloud computing include:

October 2011: House Security Subcommittee on Cybersecurity, Infrastructure Protection, and Security Technologies hearing on “Cloud Computing: What are the Security Implications?”.

September 2011: House Subcommittee on Technology and Innovation hearing on “The Next IT Revolution?: Cloud Computing Opportunities and Challenges”.

In May 2010, The White House blog announced that the first government-wide system, Recovery.org, was going to be housed through cloud computing.

Upcoming Events

To view a calendar of events of relevance to TAP academic work, please see the TAP Events page.

Media Contact

For media inquiries on a range of TAP topics, or for assistance facilitating interviews between reporters and academics, contact TAP@techpolicy.com.

Key Legislation

In January 2011, the President signed into law the America COMPETES Reauthorization Act of 2010 (H.R. 5116) which, supports national research in key areas affected by the increased use of public and private cloud computing.

In December 2011, Congress passed the National Defense Authorization Act of Fiscal Year 2012 (H.R. 1540 and S. 1867), which requires the Pentagon to move its data to cloud-computing services.

In January 2012, the House passed the Advancing America’s Networking and Information Technology Research and Development Act of 2012 (H.R. 3834) which among other items, requires the examination of funding mechanisms and policies for the use of cloud computing services for science and engineering research.

In April 2012, the House passed the Cybersecurity Enhancement Act of 2012 (H.R. 2096). In part, this Act requires continued development and implementation of a strategy for the use and adoption of cloud computing services by the federal government.