Report cites potential privacy gotchas in cloud computing

World Privacy Forum claims that cloud-based services may pose risks to data privacy

Lost protections. Storing data on cloud-based systems and accessing it via the Internet could have an impact on any legal protections afforded to the data, according to the report. For instance, it claimed that trade secrets and privileged lawyer-client information may not have the same level of protections when hosted on third-party servers as they do when stored internally.

Open doors on data. The report said that government agencies as well as parties involved in legal disputes may be able to more readily obtain data from a third party than from the owner of the information. For instance, laws such as the USA Patriot Act and the Electronic Communications Privacy Act give the US federal government authority to compel disclosure of records held by cloud vendors, the report maintained, adding that many of the vendors are likely to have less incentive to resist such requests than the actual data owners do.

Location counts. The location of a cloud provider's operations may have a significant bearing on the privacy laws that apply to the data it hosts, the report said. It added that companies should examine whether laws such as the European Union's Data Protection Directive could be applied to data that is stored by a cloud vendor in Europe, even if the information is being kept there on behalf of a U.S. company.

In addition, companies should have plans in place for protecting their data in the event that a cloud provider is bought by another vendor or declares bankruptcy, the report warned. A change in ownership could result in new terms and conditions or a change in where data is kept, it said. Similarly, a bankruptcy filing could force a cloud provider to sell its assets, which might end up including the data of its customers, according to the report.

David Hobson, managing director of Global Secure Systems, a security vendor and consulting firm, agreed that companies storing data in the cloud need to have a full understanding of the information and the confidentiality requirements attached to it.

"The minute you outsource the data, you are opening yourself up to potential problems," Hobson said. Often, a company may not even know exactly where its data will be stored, Hobson said, noting that the information sometimes can end up in multiple locations, each of which may be subject to different privacy requirements.

Businesses also should do due diligence on hosting companies and make sure that the data security and privacy practices in cloud environments are at least as good as their own are, Hobson said. And it's important to know the kind of business continuity and disaster recovery measures that cloud providers have in place, and their policies for dealing with data breaches, according to Hobson. It's easy for users who are intent on cutting costs via cloud computing to overlook such issues, he said, but he thinks privacy protections need to be spelled out in contracts.

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