Wandering clouds — emerging trends in cloud services contracts

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With offerings provided ‘as a service’ becoming increasingly prevalent, more lawyers in both private practice and in-house will be seeing cloud-related contract terms and wondering what to do with them; are they really negotiable and to what extent? Are supplier positions reasonable?

Certainly in the initial ‘launch’ phase of cloud offerings (i.e. those offered on a one-to-many basis, utilising shared facilities rather than a bespoke hosted service being extended to a single customer), the contract terms that a user could expect to be asked to sign up to would be very restrictive in terms of the level of contract risk that the supplier would accept (and this has been reflected in wider market studies conducted by the likes of QMUL and Stanford University). However, in recent months, there have been demonstrable signs that this position is changing and that the scope for genuine negotiation has grown.

Before going on to look at the nature of the changes and some of the potential reasons for them, it is perhaps worth recapping the reasons why cloud contracts developed in the way that they did in the first place…

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