Singularity Law

In the computer field, like any other field, there are “fads.” Some fads are short lived, while others take root and become part of the fabric of the IT business world. Unfortunately, it is difficult to tell sometimes what kind of fad we are talking about. When the Internet was first opened up to “public” usage (versus its prior use that was limited to government agencies, universities and some government contractors) there were many people who thought the public’s infatuation with the Internet would be a passing fad. How wrong they were.

Some fads, however, do seem to peak. While virtual worlds still seem to be growing, they are not expanding nearly as quickly as in their early days. Many of those who went into virtual worlds thinking that they would be as liberating as the Internet was in its early days have been disappointed and have scaled down their presence or left entirely.

Music-based videogames, like “Guitar Hero,” seem to have peaked and people are talking about “Guitar Hero burnout” – people seem to be tiring of the genre.

Today, “cloud computing” seems to be all the rage. Virtually every computer industry publication is filled with articles about the subject, even though people vary greatly on what they mean by the term. As stated in the IT Law Wiki:

Cloud computing involves the sharing or storage by users of their own information on remote servers owned or operated by others and accessed through the Internet or other connections. Cloud computing services exist in many variations, including data storage sites, video sites, tax preparation sites, personal health record websites, photography websites, social networking sites, and many more.

From a legal perspective, the critical factor in “cloud computing” is that the applications programs and your client’s data reside on computers that are not under your client’s control. This obviously raises security and privacy issues. One of the “benefits” of the “cloud” is that the user does not need to be concerned about where the computers are located. A given application could use computers in multiple jurisdictions to provide services and the user is unaware of where the computers are located. But since sensitive data is being processed in these cloud computing applications (e.g., corporate payroll, individual tax returns), the user must be concerned about where that data is being processed and stored.

Not all countries have the same data protection laws as the United States, yet U.S. laws may place a non-delegable legal obligation on your client to safeguard that data, no matter where it is physically located. Adding to the problem is the fact that many cloud computing applications are contracted for online using a clickwrap license, which does not give the client the opportunity to negotiate appropriate safeguards for the data to be supplied.

Another problem with cloud computing is the possibility that the vendor will cease doing business. Not only will the applications no longer be available to process the company’s data, but the data may disappear as well. And even if the client retains backup copies, the data may be useless without access to the applications needed to run it, display it, or even port it to a different vendor.

Whether cloud computing is a fad is still an open question. But whether or not it is, there are some real legal issues that exist today that clients need to be concerned about and must be dealt with before they jettison their in-house computer systems and move to the cloud. Clients cannot afford to bury their heads in the cloud!