Governments and the Cloud

National governments are increasingly mindful of the legal and regulatory aspects of cloud computing. Governments around the world are moving toward greater use of cloud systems for government data management operations. Yet, those government initiatives are constrained by recognition of the jurisdictional complexities potentially presented by the cloud structure. The government of New Zealand, for example, has set ambitious goals for greater cloud computing use, however, it has also mandated that all cloud computing systems used by the government will be physically located in New Zealand. New Zealand government data will not be moved offshore. Expect other governments to adopt similar limitations on government cloud systems in an effort to make their data systems more secure and to retain jurisdictional control.

Commercial users of cloud computing systems will likely also make increasing use of geographic limitations. Through contract provisions in service agreements, commercial users of cloud systems will attempt to specify the jurisdictions in which their data will be stored. In this way, cloud users will be better able to ensure legal and regulatory compliance with regard to their data and data systems. In this type of environment, it is possible that nations will compete to attract cloud network hubs and other data centers by establishing legal and regulatory frameworks viewed to be attractive by the cloud service providers and users. Cloud systems and other distributed networks can make use of forum shopping to identify the jurisdictions that are optimal from a functional perspective, and then move to place their operations in those locations. An important element of the attractiveness of any jurisdiction, from an information technology perspective, is its legal and regulatory climate with regard to key issues including: data privacy, computer security, intellectual property rights, computer crime, and electronic transactions. As governments compete to attract cloud computing operations, they will continue to evaluate and modify their policies and laws affecting information technology as an important part of their efforts to participate in the emerging global cloud computing environment.