What You Need to Know:

China has issued a new draft law tightening the regulation of cloud services. The draft:

..covers onshore hosted SaaS and PaaS (but possibly not IaaS)

..imposes new restrictions on cross-border partnerships that may render some current arrangements unworkable

..imposes obligations on cloud service operators to monitor and police users of their platforms

..increases data security and breach reporting requirements

While the law is only in draft form, its key components are consistent with other recent Chinese Internet-related regulation and seem unlikely to change materially. In order to minimize potential business impact when the final form of the law is enacted, participants in the space should start reviewing their current operating structures and practices now.