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There’s a problem facing cloud computing
that doesn’t have an easy solution yet.
Although it is often not obvious where
data is actually residing when it’s uploaded
to a cloud service such as Web-based e-mail,
the location does matter. And depending on
the legal jurisdiction where the data is stored,
it could be exposed to government scrutiny
or to unexpected regulations. “When data
is physically located within a country, that
country has the practical ability to force
access to that data by various means,” says
Katitza Rodriguez, international rights
director for the Electronic Frontier Founda-
tion, a tech-focused civil-rights organization.
That is cause for worry in Canada and
some European countries, where activists
fear that strict local privacy rules may not
apply if citizens’ data is stored on servers
in the United States. The powers of U.S.
law enforcement to snoop on e-mail and
other records were expanded by the USA
Patriot Act, passed shortly after the Sep-
tember 11 terrorist attacks. The Canadian
province of British Columbia responded
with a 2004 law requiring public bodies to
ensure that citizens’ personal information,
such as health records, be “stored only in
Canada and accessed only in Canada.”
The spread of restrictive data laws could
make it more difficult for overseas compa-
nies and government agencies to use com-
mercial cloud providers, the largest of which
are based in the United States. Indeed, the
U.S . Department of Commerce considers
legal obstacles to “transborder data flows” a
brewing threat to free trade. It has formed a
committee with Mexico and Canada to make
sure privacy laws don’t stand in the way.
The jurisdictional issue is already hav-
ing effects. Francis deSouza, group presi-
dent for enterprise products and services
at Symantec, says his company has negoti-
ated with a Swiss financial institution about
running the bank’s e-mail servers and other
software. In principle, they could be hosted
in an existing Symantec data center any-
where. But because Swiss bank secrecy laws
don’t apply outside the country, deSouza
says, doing business will mean building a
new data center in Switzerland.
Yet storing data outside the U.S. may
not be enough to shield it from American
law enforcement. Microsoft and Google
inflamed anxieties in Europe this summer
when they confirmed that even data stored
outside the United States—including in
European data centers—could be subject
to lawful U.S . government requests (not
to mention those of other nations). All
this is making the cloud a difficult place
to hide, particularly when it comes to sen-
sitive data. Last year, for instance, Ama-
zon booted the whistleblower organization
WikiLeaks off its cloud servers amid com-
plaints from Washington that WikiLeaks
was storing stolen classified documents on
Another potential headache: some coun-
tries require data to be logged for a certain
amount of time, while others require that
data be deleted after a certain time. As a
result, companies like Facebook that store
data in multiple places may face conflict-
ing mandates, says Daniel Garrie, general
counsel for the Focused Solution Resource
Delivery Group, which advises companies
on cloud computing contracts.
but Not Laws
as cloud computing spreads data around the globe, a haze of legal
and privacy questions follows.
By erica naone
More on Cloud
read the complete report at
additional stories include:
The Battle for
Google and microsoft especially
covet customers in the public sector.
What happens when your
software goes dark.
China’s Cloud Valley
China thinks big—very big—when
it comes to cloud computing.
Chasing the African Cloud
The developing world demands
its own data centers.
Online Storage: The Route
to Ruling the Cloud?
Two startups that ease file-sharing
hope to become Internet giants.
Who Coined “Cloud
a tale of a buzzword and
a failed business.
5 Ideas for Using Server
Innovative ways to make data
centers more efficient.
Q&A with Marc Benioff
The salesforce.com founder
helped pioneer cloud services.
How cloud computing can change
Nov11 Business Impact.indd 78
10/11/11 6:56 PM
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