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How does regulation affect cloud computing?
By: Ron Zink, Associate General Counsel
05 March 2010

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The age of ‘cloud computing’ is dawning, which will allow our data, software and computing power to be on our desktop and extended online as and when needed. This will provide many new opportunities for businesses and other organisations to manage large amounts of data and activities securely, efficiently and cost-effectively.

Cloud computing raises a lot of challenges for regulation, however. The laws of different countries—even within the EU—still can be very different in areas that affect cloud computing. Data privacy is a good example of the challenge. It is so important to have good data protection laws to protect the confidential information of individuals and organisations and Europe has been a leader in this area since 1995 (with the passage of the Data Protection Directive). Unfortunately the full promise of Europe’s leadership has not been realized. Inconsistent implementation and enforcement practices among Member States have lead to unacceptable differences in protection throughout the EU. These differences have resulted in increased compliance costs without enhancing and in some cases degrading protection for users. Moreover, as things stand now, if a cloud computing provider complies with one EU country’s data protection laws, it could well find itself in violation of the laws of another!

Microsoft’s General Counsel Brad Smith addressed several cloud-computing regulatory issues of this type during his recent visit to Brussels, and described some of our ideas for how governments might proceed. The issues he covered included broadband availability, data protection and data transfer, security against cyber-attacks, and cross-border co-operation.

If you haven’t already done so, you can watch Brad’s speech in full at this link, and read our white paper containing specific ideas on regulation related to cloud computing These are big issues that can only be resolved with broad participation from government and industry, working co-operatively together. So have a look, and do let us know any ideas that you may have on the topic!