There is a lot of hype and excitement about cloud computing. The European Commission, in particular, has been committed to developing cloud computing and, in late 2012, it adopted a strategy for "Unleashing the potential of cloud computing in Europe" designed to increase the use of cloud computing across the economy.

"Cloud computing" refers to the storage of data - such as text files, pictures and video - and software on remote computers, which users access over the internet on the device of their choice. This is faster, cheaper, more flexible and potentially more secure than on-site IT solutions. Many popular services such as Facebook and web-based e-mail use cloud computing technologies but commentators state that the real economic benefits come through widespread use of cloud solutions by businesses and the public sector.

A key part of the Commission's strategy is the formation of an Expert Group on Cloud Computing as a response to stakeholder concerns relating to cloud computing contracts. From the perspective of cloud service providers, they indicated that the complexity and uncertainty relating to the existing legal framework makes cross-border activity more difficult. From the perspective of consumers and SMEs, their view was that, although existing European legislation may protect them using cloud computing services, they are often unaware of their rights and are not informed by the cloud service provider in a sufficiently clear and unambiguous manner about the contractual conditions. In addition, representatives of consumers and SMEs indicated that vague and unbalanced cloud computing contracts make them reluctant to take up cloud computing services.

The key objective of the Expert Group is to assist the Commission in the identification of safe and fair contract terms and conditions (Ts&Cs) for cloud computing services for consumers and SMEs. The Expert Group has been asked to take into consideration existing best market practices in contract Ts&Cs in cloud computing contracts, as well as the relevant provisions of the Data Protection Directive. In essence, the Expert Group is tasked with helping the Commission to explore ways to improve the legal framework for cloud computing contracts for consumers and SMEs to strengthen their confidence in using cloud computing contracts.

The Expert Group met for the first time in Brussels on 19 and 20 November 2013 and had a series of meetings during 2014. The following key list of topics was discussed by the Expert Group (in no particular order):

  • pre-contractual information
  • availability of the service
  • modifications of the contract
  • switching – data portability upon switching
  • liability for non-performance including remedies and penalties
  • subcontracting
  • use and control of digital content
  • consequences and conditions of termination of the contract including preservation, transfer or erasure of data
  • cloud specific unfair terms
  • data location and data security
  • data disclosure and integrity
  • compliance with provisions on data transfer

It is not entirely clear what the next steps will be for the Expert Group. One of the options being discussed is the issue of a policy paper which will launch a broad public consultation on possible ways forward on cloud computing contracts. Another option is the development of model clauses for cloud computing.

Whatever the option, hopefully, the formation of the Expert Group and the deliverables of that group should assist consumers and SMEs to navigate through the typical contractual issues in cloud computing contracts. It should be noted that many of these issues should be familiar to those who deal regularly with information technology contracts. However, even in respect to those issues, the nature of cloud computing can create new or different risks and consumers and SMEs will need to consider those issues afresh in the cloud computing context.