Privacy & Data Security Advisory: It’s Not Just Europe: Why 2016 Cloud Vendor Management Programs Should Address Evolving Global Privacy and Cybersecurity Risks

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2015 has seen landmark changes in privacy and cybersecurity laws and regulatory best practices. These developments have had a direct impact on cloud vendors. For example, evolving judicial and regulatory interpretations of pre-existing cross-border transfer laws are transforming the ways that personal data can be managed in the cloud. Also, this year, U.S. regulators have issued four written guidance reports calling for companies to monitor the data security practices of their vendors. These written guides signal heightened regulatory attention to the issue of vendor security going forward. This may force vendors to revisit pre-existing contractual terms that often place privacy and data security legal compliance exclusively on cloud customers.

Also, cloud vendors will find their operations increasingly impacted by privacy and data security developments based upon the sheer volume of personal data at issue. Almost overnight, companies have collectively migrated thousands of terabytes of data en masse from their own servers to cloud vendor environments. Cloud vendors offer simplified solutions to companies for essential business functions such as customer relations management (CRM), human relations/employee benefits and data management platforms (DMPs), to help target the purchase and sale of online advertising. Some household names in the cloud-based service provider industry emanate from Silicon Valley (e.g., Salesforce, Workday and Oracle). Perhaps lesser known—but increasingly impactful—is the number of sizable cloud-related vendors originally emanating from Israel and purchased by U.S. companies (e.g., SAP enterprise software, Visual Tao and CTERA Networks). With developments like Google’s recent purchase of the Israeli-founded Waze app for a reported $1 billion and Microsoft’s recent purchase of Israeli-founded cloud security firm Adallom, some have argued that the Israeli tech community is second in line globally only to Silicon Valley.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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