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Cloud Computing: Opposition Mounts to 'Take-it-or-Leave-it' Contracts

By Dick Weisinger

The use of Cloud Computing is growing quickly.  In fact, the Information Services Group, an IT consultancy, finds that the number of global IT cloud computing service deals have tripled since 2010.

But many worry about the details of the contracts that are being signed for cloud computing services.  The Cloud Industry Forum found that, of the cloud computing contracts that are being signed, only 52 percent of them involved negotiations.  The remainder of deals are based on standard ‘click-through’ contracts.

Barry Murphy, an analyst at Boston-based eDJ Group, told ComputerWorld that ”People don’t think about the legal issues because this is so new. There’s no prescriptive case law, so there’s a lot of trepidation among lawyers anxious to both protect the company’s data and remain on the correct side of government regulation.”

ComputerWorld quotes Tanya Forsheit, a founding partner of InfoLawGroup,  said that “The cloud providers try to convey a take-it-or-leave-it attitude for their contracts, expecting people to click through the ‘I accept’ options the way people click through the iTunes website.”

Christopher Millard, in an interview with Computer Weekly, professor of privacy and information law, said many clauses for cloud computing services are so extreme they would be unenforceable in UK law.  ”We have found attempts, usually by American cloud suppliers, to not only deny that they have any liability for any damage that might be caused, but sometimes they even try to shift liability to the customer.”

The European Commission distributed in a written communication an opinion saying that ”The use of ‘take-it-or-leave-it’ standard contracts might be cost-saving for the provider but is often undesirable for the user, including the final consumer. Such contracts may also impose the choice of applicable law or inhibit data recovery. Even larger companies have little negotiation power and contracts often do not provide for liability for data integrity, confidentiality or service continuity.”

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One comment on “Cloud Computing: Opposition Mounts to 'Take-it-or-Leave-it' Contracts
  1. Das Kamhout says:

    The Open Data Center Alliance released some guidance last year on how to setup master service agreements, and the key areas of focus for any commercial relationship with a Cloud service provider, numerous Enterprise IT shops are starting to go this route, which is similar to how we would operate any interactions with a large vendor in our supply chain.

    This is a good read and set of base requirements for any large scale IT shop.

    Das Kamhout
    @dkamhout
    IT Cloud Computing Lead
    Intel

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