Patriot Act, not products, ups Cloud risks for CIOs

Understanding of how data is housed important, not just where it’s stored

The global release of Microsoft’s Office 365 last week has raised a simple, sobering thought about dealing with US Cloud providers – they are subject to the US Patriot Act and the data they manage may be accessed by the US government regardless of where it is stored around the world. Before CIOs shun Cloud services altogether, let’s put the news in context.

At the local Office 365 launch in Sydney, the question was asked where the data is physically stored. For Australian companies signing up to Office 365 with Telstra, the data is stored in Microsoft’s Singapore data centres.

[See CIO’s section on Cloud computing for news and feature articles.]

Within 24 hours reports by ReadWriteCloud and highlighted the fact that Microsoft, being subject to the Patriot Act, can be compelled to hand over data regardless of where it is located, including Singapore.

Microsoft Australia’s chief technology officer, Greg Stone, says local CIOs need to be aware the Patriot Act is an industry-wide issue that shouldn’t be associated with only one product launch.

“It’s an area I have traversed with customers well,” Stone says. “The Patriot Act applies irrespective of where the company operates in the world. I have had this discussion with CIOs and the Act includes US-based outsourcers who have operated here for years, so a move from an outsourcer to the Cloud does not increase that risk profile.”

According to Stone, the Patriot Act receives a lot of airplay because it is associated with anti-terrorism measures, but there are existing laws in many countries, including Australia, to allow governments to request private information from companies.

Not only can laws like the Patriot Act force a company to hand over data, they can also prevent the company from telling anybody about it.

Stone says the issue doesn’t go away when local Cloud companies attempt to establish a presence in the US as well.

“As an industry we tend to focus on specific things we see as a problem like whether the data encrypted,” Stone says. “But the real issue for CIOs is recognition of the overall risk that needs to be identified and how does it change in any move to the Cloud: Does the risk increase, decrease, or remain the same?”

“With many organisations assessing their risk profile, Cloud providers need to be more open about how they do things. And the risk changes depending on the level of obligation on the user.”

Microsoft is not alone

While Microsoft and its popular Office 365 service is an easy example to cite when discussing the reach of the Patriot Act, local Cloud service subscribers can’t overlook the fact that it is a law that applies to all US companies, so US-based Cloud providers doing business in Australia are in the same boat.

Here is a short list of US-based Cloud and outsourcing providers housing Australian business and government information:

  • Apple
  • Amazon Web Services
  • Dell
  • EMC
  • Facebook
  • Google
  • HP
  • IBM
  • LinkedIn

It is also important to note the Patriot Act applies to all forms of data, not just perceived “Cloud storage”. A SaaS app or social network is just as susceptible as a backup service.

The story is obvious enough. Interest in public Cloud services among consumers and enterprises is white hot right now, but there is little discussion around laws like the Patriot Act and what that might mean for US companies doing business all around the world.

Many Australian CIOs are concerned about where their organisation’s data is stored, but this is only really part of the story. If the data can be accessed without permission by law enforcement bodies, it joins the list of risks of moving to the Cloud alongside availability, data integration and, of course, security.

There’s no need to panic, but Cloud subscribers should always be aware of how secure their information is and whether it can be accessed – illegally or 'legally'.

Last week’s Office 365 launch certainly put the spotlight back on the Patriot Act, but in terms of business risk for CIOs, it’s no different to using Google Apps or outsourcing to IBM. High-profile Cloud app launches just make it more newsworthy.

Follow Rodney Gedda on Twitter: @rodneygedda

Follow CIO Australia on Twitter: @CIO_Australia

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