What are the legal risks of Cloud Computing and Data Hosting?

When you move your business data to the cloud (e.g., AWS, Azure, Google Cloud), you are moving your legal liability to a third party.

1. Data Sovereignty

Many cloud providers store data in offshore data centres (e.g., Singapore or the USA). Under the Privacy Act 1988 (Cth), you must take reasonable steps to ensure that the overseas recipient does not breach Australian Privacy Principles. If they have a breach, you are often deemed to have committed the breach yourself.

2. Standard Form Contracts

Major cloud providers offer “take it or leave it” contracts. These typically:

• Exclude almost all liability for data loss.
• Offer minimal service credits for downtime.
• Allow the provider to change the terms at any time. Businesses with significant data needs should consider “Enterprise Agreements” that offer better legal protection.

3. Data Portability & Lock-In

What happens if you want to leave the provider? Standard contracts rarely guarantee that data will be returned in a usable format. You should ensure your hosting agreement includes a “Transition Out” clause to avoid being ’locked in’ to a provider whose prices or service quality have degraded.

Related Topics

• Cybersecurity Policies
• SaaS Service Agreements
• Privacy Compliance

Review Your Hosting Terms

We help businesses audit their Managed Service Provider (MSP) and Cloud Hosting agreements to identify hidden risks.

Moving to the cloud? Contact Bell & Senior today. Call (07) 5532 8777.