Negotiating Cloud Contracts: Looking at Clouds from Both Sides Now

January 7, 2013

Stan. Tech. L. Rev. 81

W. Kuan Hon

Christopher Millard

Ian Walden

Abstract:

Contract terms for cloud computing services are evolving, driven by users’ attempts to negotiate providers’ standard terms to make them more suitable for their requirements, as well as market developments, particularly among cloud integrators. This Article, drawing on sources including interviews with cloud computing providers, users and other market actors, is the first in-depth research into how cloud contracts are negotiated. In particular, we have focused on instances where users have requested changes to providers’ standard terms, and the extent to which providers agreed to those changes. We have found that the terms that generated the most negotiation were provider liability, service level agreements, data protection and security, termination rights, unilateral amendments to service features, and intellectual property rights. Changes to providers’ standard terms are likely to filter down from large deals where users have negotiated amendments, and filter up from regulatory action affecting the consumer market. This Article suggests a multiplicity of approaches are emerging, rather than a de facto ‘cloud’ model, with market participants developing a range of cloud services with different contractual terms, priced at different levels, and embracing standards and certifications that aid legal certainty and compliance, particularly for small and medium-sized enterprise users.

Negotiating Cloud Contracts- Looking at Clouds from Both Sides Now

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