Shifting cloud cover: The changing technological and legal landscape of cloud contracting

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1 Shifting cloud cover: The changing technological and legal landscape of cloud contracting CALUM MURRAY, KEMP LITTLE CHRIS HILL, KEMP LITTLE GLEN ROBINSON, AMAZON WEB SERVICES 25 / 06 / 2014

2 Session outline Why cloud developed and what it offers How the technology is evolving and blurring (SaaS, PaaS, IaaS) Where the technology is going next Where the market is now on legal terms How the market is maturing Recent industry and legal developments in the area and what they mean for business

3 Why cloud developed and what it offers (1) Paradigm shift in computing You have to know the past to understand the present 80s computer hardware, software, processing in one (big) box Internet boxes talk to each other Bandwidth faster data transfer Splitting of the components Virtualisation

4 Why cloud developed and what it offers (2) Huge economies of scale: Hardware purchase Maintenance Standards Personnel Cost

5 What is cloud? Variations on a theme: Network Split of elements that combine to provide computing power SaaS, PaaS and IaaS for more detail search for Kemp Little cloud jargon guide Spectrum of control Public vs private / community clouds

6 Cloud Adoption Glen Robinson, Mgr Solution Architecture 25 th June 2014

7 Now part of your everyday life

8 Support Professional Services Training Certification Technology Partners Consulting Partners Ecosystem AWS Marketplace Elastic Beanstalk for Java, Node.js, Python, Ruby, PHP and.net Containers & Deployment OpsWorks CloudFormation IAM CloudTrail Cloud HSM CloudWatch Management & Administration Management Console APIs and SDKs Command Line Interface Analytics Application Services EMR Redshift Kinesis Data Pipeline CloudFront SNS SQS SES SWF WorkSpaces AppStream CloudSearch Networking VPC Direct Connect Route 53 Compute Storage Databases MySQL, PostgreSQL Oracle, SQL Server EC2 Elastic Load Balancer Auto Scaling S3 EBS Glacier Storage Gateway Import/Export RDS DynamoDB ElastiCache Regions Availability Zones Content Delivery POPs

9 A Rapid Pace of Innovation : 105 New Features and Services Since January

10 Our 42 nd Price Reduction Effective April 1, 2014 S3 EC2 RDS EMR 51% reduction 38% reduction Average 27% to 61% on average for M3 reduction of 28% reduction Tier prices decrease 30% reduction for C3 from 36% to 65% ElastiCache 10% to 40% reduction for M1, M2, C1 and CC2 Average reduction of 34%

11 What are customers looking for in the datacenter? Private network Private compute Private storage Private key management Governance

12 The Good News Is That You Can Get All of This in the Cloud Private network Private compute Governance Private storage Private key management

13 The Financial Times Group picked AWS RedShift for its data warehousing tasks and reduced its data processing time by 98%. That s not all. The public cloud service also helped it cut costs by 80%. Amazon Redshift Fast, simple, petabyte-scale data warehousing for less than $1,000/TB/Year

14 Using AWS Enables Supercell to Provide Reliable Performance for 8.5M Players Each Day The world of gaming never sleeps. We owe every player a great experience, and AWS is our main tool to make Finland-based Supercell is one of the fastest-growing social game developers in the world Supercell founders wanted its developers to focus on making outstanding games rather than on IT tasks and infrastructure maintenance Supercell uses AWS to provide scalability and reliable performance for its 8.5M daily players that happen. - Sami Yliharju, Director of Server Engineering

15 Top th fastest supercomputer on-demand Nov 2013 Top 500 list TFlop/s 26,496 cores in a cluster of EC2 C3 instances LinPack Benchmark

16 TRADERWORX: Market Information Data Analytics System For the growing team of quant types now employed at the SEC, MIDAS is becoming the world s greatest data sandbox. And the staff is planning to use it to make the SEC a leader in its use of market data Powerful AWS-based system for market analytics 2M transaction messages/sec; 20B records and 1TB/day Elisse B. Walter, Chairman of the SEC Tradeworx

17 News Corp made the journey into the cloud Dev & Test True Production Mission Critical All-in Share development globally, in minutes APIs integrated legacy technology Dozens of mobile apps Back office apps 3,000 apps by Jan 2015 AWS will contribute toward a global savings of $100M in our infrastructure costs. Stephen Orban CTO All-in

18 There are many reasons to move to the Cloud #1: Agility #3: Continual Iteration and Innovation Our 42nd Price Reduction #2: Platform Breadth #4: Cost Savings and Flexibility

19 Many Thanks

20 How the cloud market is maturing contractual structures Multiple vendors Subcontracting Questions on: Responsibility / risk allocation Layers of terms Location Funnelling and integrators

21 Price vs control and terms Closed Private Open Public Custom Managed Virtual Community Public Cloud Private Cloud Private Cloud Private Cloud Private Cloud Owner Customer Customer Provider Provider Provider Operator Customer Provider Provider Provider Provider Service Access Closed Closed Closed Limited group Open Level of Control Full High High Low None Security / Location As selected by Customer As selected by Customer As selected by Customer As described by Provider As described by Provider Legal Terms Negotiable Negotiable Negotiable but clear impact on price for changes Limited outside of standard agreed terms Standard terms only - nonnegotiable

22 How the cloud market is maturing contracting terms (1) Public - You don t get what you don t pay for: Commoditised services Much cheaper Low control over anything US-style approach - no legal liability, let the market decide Legal risks on customer But, for commoditised low cost services, this may be reasonable to some extent, and depending on the technical context

23 How the cloud market is maturing contracting terms (2) Private - You should get what you do pay for: Less commoditised, therefore more expensive Far more control a bit more like outsourcing Bigger enterprise clients / those prepared to pay more Theoretically should go further towards facilitating legal compliance

24 How the cloud market is maturing contracting terms (3) The terms themselves - When you don t get what you have paid for: Still a seller s market Even for private cloud terms still based on the supplier s standard terms

25 How the cloud market is maturing contracting terms (4) The terms themselves - When you don t get what you have paid for: The standard issues that come up: Limitation of liability Service levels Security and data privacy Termination rights Exit assistance / data portability Unilateral change of terms / service features IPR ownership

26 How the cloud market is maturing contracting terms (5) Movement on terms Some liability accepted for data and IPR Some service levels - but what boundaries? Commercial market pressures Deals failing Increased competition End of the beginning but far from a buyer s market More detail in our event archive search for Kemp Little archive cloud market

27 How the cloud market is maturing public sector intervention Public pressure Public sector intervention but commercial rather than legislative G-cloud European Cloud Computing Strategy

28 How the cloud market is maturing G-Cloud background UK government project Promote uptake and facilitate procurement of cloud services in the public sector, particularly SMEs CloudStore catalogue of services for procurement Framework agreement and minimum standards / accreditation

29 How the cloud market is maturing G-Cloud - issues Framework plus supplier s own standard terms: Precedence of framework Missing terms Conflict vacuum Order Form terms Public procurement rules issues But lessons learned Renewed every 6 months, G5 just finished

30 How the cloud market is maturing European agenda European Cloud Computing Strategy part of Digital Agenda Public authorities have a role to play in forging a trusted cloud environment in Europe. They have an opportunity to use their procurement weight to promote the development and uptake of cloud computing in Europe based on open technologies and secure platforms. Three limbs: Safe and Fair Contract Terms and Conditions Cutting through the jungle of Standards Establishing a European Cloud Partnership

31 How the cloud market is maturing European agenda 1. Safe and Fair Contract Terms and Conditions Commission has identified that terms are limiting uptake In June 2013 set up a group of experts to define safe and fair conditions and identify best practices for cloud computing contracts

32 How the cloud market is maturing European agenda 1. Safe and Fair Contract Terms and Conditions Explicitly mentioned: data preservation post-termination data disclosure, integrity, ownership, location and transfer direct and indirect liability service changes subcontracting Optional use - the so what test Public sector use?

33 How the cloud market is maturing European agenda 2. Cutting through the jungle of standards Aim of promoting interoperability, data portability and reversibility anti-lock-in European Telecommunications Standards Institute tasked to develop standards Report and map of standards at Final_report-013-CSC_Final_report_v1_0_PDF_format-.PDF Aiming at self-certification schemes the priority now is to deploy existing standards to develop confidence in cloud computing via comparable service stacks as well as interoperable and diverse offerings

34 How the cloud market is maturing European agenda 3. European cloud partnership Aim of gaining efficiencies by pooling public sector requirements Reduce costs and enable interoperability and market opportunities for SMEs Comparable initiatives to G-Cloud

35 How the cloud market is maturing European agenda What does this mean in practice? The so-what test Likely uptake via public procurement weight Public sector can stimulate and shape the market through their significant buying power Competitive opportunity for smaller firms Therefore use in the private sector as well?

36 Latest developments Right to be forgotten Google ordered to remove old / irrelevant search results at the request of the data subjects Thousands of requests already Held that Google: is processing by retrieving, recording, organising, storing, and making available the data in question is the controller determines the purposes and means of the processing A29WP Opinion 05/2012 possibility of cloud provider as controller Controllers by analogy Enforcement? Cost implications?

37 Latest developments data lien case Your Response Ltd v Datateam Business Media Ltd [2014] EWCA Civ 281 Can data be retained by a supplier pending payment of fees Lien on intangible data Not for now, but watch this space Comfort for customers; pointer for suppliers

38 Latest developments Model Clauses and Safe Harbour Model Clauses 2010 Model Clauses EEA controller to non-eea processor, with non-eea sub-processor A29WP addressing EEA controller to EEA processor, with non-eea sub-processor Working document Uptake? Safe Harbor Renegotiation post-snowden Transparency, clarity on government access, active audit and enforcement Publishing of privacy provisions of contracts with subcontractors

39 Latest developments Microsoft in Dublin Drug trafficking investigation Warrant issued in New York for s held in Dublin data centre Microsoft resisting Verizon assisting Impact on trust in US cloud providers Efforts on encryption

40 Latest developments cybersecurity Proposed Cybersecurity Directive Part of Digital Agenda National authorities and computer emergency response teams Article 14 market operators obliged: to take measures which guarantee a level of security appropriate to the risk presented to notify of incidents having a significant impact on the security of the core services they provide

41 What next? Market continues to develop Rate of change unlikely to lessen Shaping the market: Market power Legislative intervention Technological development Speed, unpredictability watchful eye required

42 Speakers Calum Murray Head of Commercial Technology Chris Hill Senior Associate, Commercial Technology Glen Robinson Solution Architect Manager, Amazon Web Services

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