Legal Issues To Consider When Moving To The Cloud

Moving to the cloud may seem like a no-brainer for most business owners. You won’t need to fork out cash for a server, you save on an on-call IT guy and you may receive more specialist service. Furthermore, with the quality of the internet in 2015, there is little noticeable difference between upload and download speeds of an on-site server and the cloud.

However, several legal issues need to be considered before moving to the cloud. Some of them include: whether your data would be safe, and what would happen if your data were stolen?

This article will go through the top 4 legal issues of cloud computing and give you some insight before you make your final decision.

Privacy and security

Every business has confidential information – ranging from clients lists to trade secrets. Hence, often the first and foremost concern of a business owner is: just how safe is my data in the cloud?

The answer to this question really depends on the quality of the hosting company. An experienced cloud host will have extensive security mechanisms to ensure your data is safe. Make sure you do some thorough research and pick a good host!

Leaked data and liability

But you might still ask: what would happen if my confidential information were leaked anyway?

In this situation, you need to determine if your cloud provider has acted in a negligent manner. Very generally, this is whether they have taken all reasonable precautions to protect your data and prevent theft.

Another consideration may be the limited liability clause in your provider’s contract. This will generally state the maximum monetary amount your provider will pay in case of negligence. It may be in your interest to negotiate this clause prior to making a contract if the potential damages your business may incur will vastly outweigh the liability cap.

Service and reliability

If all your emails, files and data are run through a cloud, the smooth operations of your business will be totally reliant on cloud service. For example, were your cloud provider to have a technical problem, your whole business could be down for indefinite period of time.

There are two ways to mitigate this type of issue. First, make sure you have a good cloud provider. The Office 365 Cloud, for example, has multiple servers and multiple backups of data around the world. This means even if one of their servers were down, you would still have access to your information.

Secondly, make sure your contract stipulates that you will be credited for every day of interruption experienced. There should also be a clause allowing you to terminate the contract if the interruption spans over an agreed timeline. Nothing is worse than having to pay for a service that you are no longer using!


The question of data ownership is another very common legal issue. It is not enough to simply assume that you own all rights to data stored in the cloud. Make sure your initial contract makes it expressly clear that all data your company places in the cloud will be 100% yours and retrievable whenever necessary.

For more information on the cloud, look out for the cloud education hashtag on Twitter. #CloudEducation

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