CLOUD BASED SERVICES: FOCUSSING ON THE OPPORTUNITIES, SECURITY ISSUES AND CONTRACT TERMS

How can Businesses cope with Cloud based Services?

As the business world becomes increasingly crowded and competitive, the search intensifies to develop cost-effective strategies to stay ahead of the competition. In-house counsels are expected to contribute significantly in the development of such strategies. As the sole organization that represents the needs and interests of the in-house legal community in Malaysia, the Malaysian Corporate Counsel Association (MCCA) provides a learning and networking platform for in-house counsels to develop and hone their skills as business solution providers for the organizations in which they serve across a wide array of industries.

Businesses are rapidly turning to cloud-based services as a means to improve efficiencies and reduce cost. Aware of the legal challenges of such strategies, on 23rd April 2014 the MCCA held its inaugural General Counsel Forum (GC Forum) on the topic "Cloud based Services: Legal, Regulatory and Commercial Issues and Opportunities" where an eminent legal expert, Jeffrey J. Blatt, the Special Counsel to Astro/Usha Tegas, was the speaker specially invited to share his knowledge and experiences.

Legal 500 Asia Pacific and Chambers Asia Pacific have cited Jeffrey Blatt as one of Asia's leading telecom, media and communications (TMT) lawyers in 2011, 2012, 2013 and 2014. At the GC Forum he was able to share an international perspective on the TMT industry relevant to the cross-border nature of cloud-based services, with an emphasis on how a business can differentiate its cloud-based service from that of its competitors.

Whilst there is a variety of Clouds available, such as Private Clouds for banks and governments, Public Clouds for businesses (Amazon, Microsoft and Google), Enterprise Clouds for all or a portion of a vendor's system or even Hybrid Clouds, in actuality a Cloud would reside in a physical location situated in a country whose local laws would apply to its operations. Hence local laws and the jurisdiction where data is held would be critical issues for any business to consider.

Data or privacy protection laws often are overridden by country-specific laws that permit lawful interception or access by governmental security bodies to data stored in the Cloud of a communications service provider. This scenario combined with the controversial revelations made by Edward Snowden, force businesses to devise innovative solutions to protect and secure data in our IT centric world of smart phones, internet and cloud-based services.

A major failure or compromise of a Cloud-based service is a potential business continuity risk. Aside from a loss in market reputation, legal claims may have to be dealt with. Legal remedies must adequately address operational processes to ensure a business continuity plan is swiftly implemented and minimal disruption for customers.

Encryption, where data is coded or scrambled before it is stored, and who holds or controls the decoding key to decode such data, are fundamental considerations. A service provider may only be compelled to disclose data that is encrypted. Businesses may also need to choose a Cloud service provider located in a country with favourable data privacy laws.

This GC Forum is the first of a series of such Forums planned by the MCCA for 2014. Asked to comment on it, Jeffrey Blatt remarked that the two-way exchange was valuable for the speaker and participants in terms of information exchange and industry networking. "The MCCA GC Forum is a very valuable resource for senior legal advisors in Malaysian companies", he added.

A participant from Astro, Hoh Hon Piao, Head of Legal, found the forum useful for both learning and connecting with other in-house counsels from different industries. "There are many common challenges we would have to face and it would be useful to have a forum where we can exchange ideas and experiences".

The official sponsor of the GC Forum, Wong & Partners, was represented by its Managing Partner, Chew Kherk Ying. She lauded the potential of such a forum to provide continuous education for in-house counsels and where issues faced could be shared and discussed informally.

By the end of the GC Forum that evening, it was evident that key practical advice had been amplified and which can be readily applied.

1. Understand the Cloud-based technologies available.
2. Understand which laws apply and which legal framework to adopt.
3. Assess the business risks and how best to mitigate them

Attendance at the MCCA GC Forum is by invitation only. Information on upcoming events and how to become a member is available on its official website: www.mcca.com.my.