Transcending The Cloud - A Legal Guide to the Risks and Rewards of Cloud Computing: Tying Up the Cloud: A Study in Antitrust Issues in Cloud Computing

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The cloud computing era represents a significant shift in relationships in the information technology field. This shift will raise many antitrust questions, among other legal issues. Many antitrust questions will not become apparent until cloud computing business models become better established, but some issues are readily apparent even at the threshold. For instance:

- After a customer selects a particular cloud provider, can the customer be “locked in” to particular products and services within that cloud?

- When will a cloud provider be permitted to exclude other service providers or software providers from participating in a cloud?

This article provides some preliminary thoughts on these questions and considerations that should be taken into account by organizations providing and considering purchasing cloud computing services. Although definitive answers to these questions always require a specific factual context, the discussion below identifies some fundamental antitrust principles that apply and may help prospective cloud purchasers understand their rights and avoid potential traps by negotiating prudent contract terms when entering into a cloud computing arrangement. The key for prospective cloud purchasers (i.e., users of cloud computing services) is to obtain complete and accurate disclosures of a cloud provider’s after-market policies prior to the initial decision to enter the cloud. After the initial purchase of cloud computing services, customers may find that their bargaining power is dramatically reduced by switching, compatibility, interoperability or even early termination costs.

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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.

© Reed Smith | Attorney Advertising

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