Every cloud…

Saving your photographs, music and other documents to the cloud (rather than on the device itself) is one of the smartest moves you can make these days. Not only can you free up space on your device and access your files from anywhere in the world, you don’t need to panic when your laptop seizes up or your hard drive breaks down. Even if your computer is lost or stolen, everything you’ve stored online will still be there, floating above you like a… well, that’s how it got its name.

Cloud storage is a dynamic and growing sector which is already highly valued by consumers. Usually, Cloud Storage Providers (CSPs) allow consumers to upload documents for free. Most users stay within the free storage limits, but providers can charge up to around £40 a month for extra space.

With around 40% of UK adults now using cloud services, it’s perhaps not surprising that it’s become a very competitive market with lots of CSPs attempting to take on the biggest providers (such as Dropbox, Google Drive and Apple’s iCloud).

Isn’t competition supposed to be healthy, helping to produce an efficient, well-functioning industry? Well, yes, in theory. But recently, the sector has found itself under a cloud from complaints of hooking consumers with attractive deals and then raising prices or limiting the amount they can store.

A few weeks back, Microsoft unexpectedly removed their 30GB free storage after encouraging users to store photos and documents in OneDrive by making it a key feature of Windows and Windows Phone. After much uproar, Microsoft has now offered existing users the chance to keep their free storage, but only if they click a special link. Talk about clouding the issue…

And as if that’s not enough, consumers have also complained about the loss or deletion of data.

So now the Competition and Markets Authority (CMA) – Britain’s competition watchdog – has cast a cloud over the CSPs’ seemingly unstoppable expansion. How? By launching an investigation into whether CSPs have been breaching consumer laws by unfairly charging internet users when they use cloud storage services.

And then there are the data protection issues – CSPs aren’t supposed to store data outside the EU without users’ permission. But it can be very difficult to know where data is stored for any given cloud service. And how can we be sure that the data we save in the cloud is safe?

What’s the investigation actually about?

Briefly, the CMA is particularly concerned about:

  • unexpected price increases after a contract has been taken out;
  • changes or reductions to unlimited storage capacity deals;
  • data being lost or deleted;
  • how contracts are automatically renewed; and
  • what happens to data when a contract is cancelled.

The CMA’s review will assess how widespread these practices are, whether they breach consumer law and how they affect consumers. The review is open for responses until 15 January 2016 and the CMA wants to hear from both consumers and businesses about their experiences.

The CMA has promised to take further action if their review finds consumer protection laws have been breached. Quite what this further action will be remains to be seen, but it could include enforcement action together with seeking voluntary change from the industry. Ultimately, legal action could be taken against companies the CMA believes are breaking the law.

Head in the clouds?

So, does this just affect consumers? Not at all.

Businesses are increasingly using cloud storage services and this CMA investigation should act as a wake-up call to business owners to review the details (costs, contract changes, security etc) of their cloud usage. Many businesses end up using multiple cloud services, all of which do a similar job. Not only does this mean you might be wasting money on extra licences, but with so many overlapping contracts, it’s difficult to keep track of where you might be liable to changes from each CSP.

So, get checking those details?

What next?

It’ll be interesting to hear the findings of the CMA’s consultation, expected in May next year.

In the meantime, we’re on cloud nine (we promise, that’s the last woeful pun – for now) that Christmas is round the corner. If you need any light relief from the festive season, you can always read more about running a business, here at…

Simplify the Law

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