Consumer cloud services come in for scrutiny by UK regulator

The Competition and Markets Authority (CMA) has opened a review (11-page / 348KB PDF) into whether cloud computing providers are meeting their obligations under UK consumer protection laws. Stakeholders have until 15 January 2016 to submit their comments on the review to the CMA.

"We want to hear from business, interested organisations and consumers about their experiences, to assess whether companies understand and comply with consumer law and whether cloud storage services are working well for consumers as a result," Nisha Arora,  senior director of the CMA's consumer unit, said. "If our review finds breaches of consumer protection laws we will take further action to address these, which could include enforcement action using our consumer law powers, seeking voluntary change from the sector or providing guidance to business or consumers."

The CMA said it would be assessing cloud providers' compliance against a range of consumer protection requirements, including new consumer protection laws contained in the Consumer Rights Act which came into force in October. Compliance with rules on unfair commercial practices and pre-contractual disclosure might also "be relevant" to the review, it said.

Among the "key issues" the CMA wants to hear views on is the information cloud providers publish in advertising and marketing materials for storage services on issues such as price, contract length, service level commitments, data security and on limits on data uploads or downloads.

The regulator said it also wants to gain an understanding of "when and why changes are made to the price and/or service after consumers have signed up to contracts, how and what consumers are told about these and what options they have when it happens", and the circumstances in which consumers might "lose access to their data" and how they are informed about this.

The automatic renewal of contracts, cancellation policies and what happens to consumers' data when contracts are cancelled are among the other issues the CMA said it wants to examine.

“The CMA has already demonstrated its commitment to looking at competition and consumer protection law issues in online and digital markets," competition law expert Natasha Pearman of Pinsent Masons, the law firm behind Out-Law.com, said. "It has already looked at issues such as the commercial use of consumer data and online reviews and endorsements this year, with investigations launched into whether some businesses have broken consumer protection laws by failing to disclose that they have paid others to endorse their company online."

"In its strategic assessment published in November last year, the CMA noted the growth in cloud computing services and of the internet of things too. It said at that time that it ‘remains important’ that those areas are ‘characterised by healthy competition, and deliver good outcomes for consumers’. It is therefore no surprise to see the CMA look deeper into cloud computing issues and we might also expect the authority to examine competition and/or consumer protection law issues in relation to the internet of things at a point in the future too," she said.