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3/25/2009
12:29 PM
Sara Peters
Sara Peters
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A Cloud Might Save You Money...But What If The Cloud Goes Broke?

I've been talking quite a bit about whether or not (not) users of cloud services can prove compliance with security, privacy, and e-discovery laws. Now a story from The Register has me thinking about yet another issue -- the inescapable question of a service provider's financial stability.

I've been talking quite a bit about whether or not (not) users of cloud services can prove compliance with security, privacy, and e-discovery laws. Now a story from The Register has me thinking about yet another issue -- the inescapable question of a service provider's financial stability.From the story:

    "Finally there is the question of the financial stability of the service provider. And more importantly what happens if they go out of business suddenly or simply choose not to carry on providing the Cloud/SaaS service? Essentially this comes down to questions of how can any data and other valuable information be retrieved at a forced end of service or when the customer simply decides to terminate the arrangement? Can data be retrieved simply and easily? How will the service provider ensure that it removes such data, and any backup/replica copies from systems and ensures that these are either destroyed or placed securely in storage where they cannot be accessed?"

Although the security industry is overperforming as compared to the rest of the IT market, the flagging global economy has spurred several high-profile mergers of security companies, resulting in the abandonment of some security products/services. The big cloud providers, like Amazon and IBM, are probably safe, but cloud computing is still a new technology, and the possibility of a budding cloud provider going under before it blooms is quite real.

So what happens to its servers if it goes out of business? E-discovery and data retention laws may require that data be retained for up to three years -- and we're not just talking about data protected by privacy law. We're talking about logs and metadata. No cloud provider that I'm aware of shares logs and metadata with its customers in the first place, so why would a defunct cloud provider turn that over to their customers?

Existing laws don't fully address these new e-discovery questions, but one case did set legal precedent that a party's obligation to produce electronically stored information cannot be avoided simply by storing it with a third party. That means it's possible cloud users could find themselves legally obligated to present data that they can't provide.

Nolan Goldberg, associate at Proskauer Rose LLP, will be discussing e-discovery and cloud computing at CSI SX, in mid-May. He will be joined by Tanya Forsheit, partner at Proskauer Rose, who will discuss the international implications of never knowing where on earth one's data is stored at any given moment. Call me a dweeb, but I'm excruciatingly excited to see that one.

Sara Peters is senior editor at Computer Security Institute. Special to Dark Reading. Sara Peters is contributing editor to Dark Reading and editor-in-chief of Enterprise Efficiency. Prior that she was senior editor for the Computer Security Institute, writing and speaking about virtualization, identity management, cybersecurity law, and a myriad of other ... View Full Bio

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