Third-party data control

The legal implications of data and applications being held by a third party are complex and not well understood. There is also a potential lack of control and transparency when a third party holds the data. Part of the hype of cloud computing is that the cloud can be implementation independent, but in reality regulatory compliance requires transparency into the cloud.

All this is prompting some companies to build private clouds to avoid these issues and yet retain some of the advantages of cloud computing. For example, Benjamin Linder, Scalent System’s CEO, says: “What I find as CEO of a software company in this space, Scalent Systems, is that most enterprises have a hard time trusting external clouds for their proprietary and high-availability systems. They are instead building internal "clouds", or "utilities" to serve their internal customers in a more controlled way.”

Third-party data control Threat #1. Due diligence

 If served a subpoena or other legal action, can a cloud user compel the cloud provider to respond in the required time-frame? A related question is the provability of deletion, relevant to an enterprise’s retention policy: How can a cloud user be guaranteed that data has been deleted by the cloud provider?

Third-party data control Threat #2. Auditability

 Audit difficulty is another side effect of the lack of control in the cloud. Is there sufficient transparency in the operations of the cloud provider for auditing purposes? Currently, this transparency is provided by documentation and manual audits. Information Security Magazine asks: “How do you perform an on-site audit when you have a distributed and dynamic multi-tenant computing environment spread all over the globe? It may be very difficult to satisfy auditors that your data is properly isolated and cannot be viewed by other customers.”

A related concern is proper governance of cloud-related activity. It’s easy, perhaps too easy, to start using a cloud service.

One popular auditing guideline is the SAS 70, which defines guidelines for auditors to assess internal controls, for instance controls over the processing of sensitive information. SOX and HIPAA are other well-known regulations. US government agencies generally need to follow guidelines from FISMA, NIST, and FIPS.

Certain regulations require data and operations to remain in certain geographic locations. Cloud providers are beginning to respond with geo-targeted offerings.

Third-party data control Threat #3. Contractual obligations

 One problem with using another company's infrastructure besides the uncertain alignment of interests is that there might be surprising legal implications. For instance, here is a passage from Amazon’s terms of use:

10.4. Non-Assertion. During and after the term of the Agreement, with respect to any of the Services that you elect to use, you will not assert, nor will you authorize, assist, or encourage any third party to assert, against us or any of our customers, end users, vendors, business partners (including third party sellers on websites operated by or on behalf of us), licensors, sublicensees or transferees, any patent infringement or other intellectual property infringement claim with respect to such Services.

This could be interpreted as implying that after you use EC2, you cannot file infringement claims against Amazon or its customers suggesting that EC2 itself violates any of your patents. It's not clear whether this non-assert would be upheld by the courts, but any uncertainty is bad for business.

Third-party data control Threat #4. Cloud Provider Espionage

 This is the worry of theft of company proprietary information by the cloud provider. For example, Google Gmail and Google Apps are examples of services supported by a private cloud infrastructure. Corporate users of these services are concerned about confidentiality and availability of their data. According to a CNN article:

For Shoukry Tiab, the vice president of IT at Jenny Craig, which uses Postini and Google Maps, the primary concern is security and confidentiality. "Am I nervous to host corporate information on someone else's server? Yes, even if it's Google."

Note that for consumers, there were initially widespread confidentiality concerns about Gmail, but now those concerns seem to have faded. We believe this is an example of the Privacy Hump:

Early on in the life cycle of a technology, there are many concerns about how these technologies will be used. These concerns are lumped together forming a “privacy hump” that represents a barrier to the acceptance of a potentially intrusive technology…. Over time, however, the concerns fade, especially if the value proposition is strong enough.

Consumers at least seem to have decided that, in this case, the dangers of placing their data in the cloud were outweighed by the value they received.

Third-party data control Threat #5. Data Lock-in

 How does a cloud user avoid lock-in to a particular cloud-computing vendor? The data might itself be locked in a proprietary format, and there are also issues with training and processes. There is also the problem of the cloud user having no control over frequent changes in cloud-based services. Coghead is one example of a cloud platform whose shutdown left customers scrambling to re-write their applications to run on a different platform. Of course, one answer to lock-in is standardization, for instance GoGrid API.

Third-party data control Threat #6. Transitive nature

 Another possible concern is that the contracted cloud provider might itself use subcontractors, over whom the cloud user has even less control, and who also must be trusted. One example is the online storage service called The Linkup, which in turn used an online storage company called Nirvanix. The Linkup shutdown after losing sizeable amounts of customer data, which some say was the fault of Nirvanix. Another example is Carbonite, who is suing its hardware providers for faulty equipment causing loss of customer data.