Researchers from the QMUL Cloud Legal Project at the University of London recently shared their findings on the top issues of contention between providers and customers of cloud computing engagements. As enterprises speed headlong into cloud migrations, many of the trickier and complicated contractual and legal obligations are still being worked out. Although cost may be a major consideration in choosing your cloud provider, responses to the following questions are also important.

1. Who’s liable for damages?

Interruptions in service usually entails the right to be compensated for lost business. On the cloud landscape, however, providers mostly refuse to accept liability. Even large corporate customers had problems getting a provider to accept any monetary liability, which often turned out to be “deal breakers” in the end.

2. What about SLAs?

Service Level Agreements commit a provider to availability and performance levels, and are often negotiable through adjustments in pricing; the more you are willing to pay, the better guaranteed performance.

3. Does availability extend to data?

Cloud providers often emphasise how redundant and fault-tolerant their clouds are, but often fail to extend their guarantees to data integrity, and will not accept liability for data loss.

4. Where is the physical data storage location?

The European Union’s Data Protection Directive prohibits storing of data outside of the EU. Some cloud providers are unwilling to disclose their data centre locations, and there are also technical difficulties verifying where the data processing occurs even if they do.

5. How can I avoid lock-ins and exit when needed?

Some cloud providers are asking for huge early termination penalty fees, no doubt in order to offset upfront capital costs spread over the term of the contract. There are also limited “notice windows” for non-automatic contract renewal, so make sure these are not missed before the contract rolls over into another term.

6. Who maintains data for legal and compliance issues?

There hasn’t been much discussion around the need to retain data for legally required purposes, but this will become increasingly important in the future. How much assistance (long term data storage and data format exchange) cloud providers are willing to provide may be a differentiating factor in the future.

7. What happens when service offerings change?

Standard contractual terms drafted by cloud providers often give them the option to change certain or all contractual terms unilaterally. This may cause difficulties in adapting to new provider specific application programming interfaces when things change.

8. How are intellectual property rights maintained?

When cloud providers with system integration capabilities develop applications for their customers, one customers may demand intellectual property rights to these enhancements and deny the improvements to other customers who may be potential competitors.

9. What are the reasons for service termination?

Non-payment usually results in direct service termination, but more complicated cases involving complaints of one user against another for breach of intellectual property rights can also lead to termination. Providers also stipulate termination may occur for breach of acceptable use policies and any form of material breach. 

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