One of the greatest strengths of the Cloud is that, like the Internet, it knows no boundaries. It crosses industry and international boundaries as if they do not exist. But as is often the case, your greatest strength can also be your greatest weakness.

Take Google, for example, and it’s myriad Cloud-based application offerings. A new complaint made by google Epic (Electronic Privacy Information Center) to the US Federal Trade Commission urges the regulatory agency to “consider shutting down Google’s services until it establishes safeguards for protecting confidential information.” 

From a recent FT.com article:

In a 15-page complaint to the FTC, the Electronic Privacy Information Center (Epic) said recent reports suggested Google did not adequately protect the data it obtained. It cited vulnerabilities that revealed users' data in its Gmail webmail service, Google Docs online word processing and spreadsheets and in Google Desktop, which can index users' information held on their hard drives.

Google said it had not reviewed the filing in detail but it had "extensive policies, procedures and technologies in place to ensure the highest levels of data protection".

Privacy is mentioned as the primary concern, but reliability, too, is also mentioned as problematic in  the face of recent well-covered outages of the search-engine giant’s services. A recent nearly 24 hour windows_azure_smalloutage of Microsoft’s Azure, though admittedly of a pre-release cloud (is there really such a thing?), is certain to be cited as well as proof of the problems with reliability of cloud-based services.

Security professionals have questioned the security of the cloud, and of its suitability for applications falling under certain governmental regulations like HIPAA and BASEL II, as well as compliance with industry standard protections like PCI DSS.

GLOBAL CONCERN

What we see beginning to happen is that the cloud, with its lack of boundaries and recognition for industry and national boundaries, may fall subject to myriad – potentially conflicting – regulations regarding privacy and compliance. The US is certainly concerned with privacy, but in recent years the UK and European Union in general has surpassed even its national culture of concern regarding privacy.

Many of the EU laws and regulations regarding privacy are tougher than those in the US and elsewhere in the world, and the collision of these regulations may in fact cause cloud providers to reconsider  their global scope. Indeed, even conflicting requirements across industries may be enough to warrant something akin to the creation of “niche” clouds; cloud centers serving specific segments of industry based on the need for compliance with specific regulations both in the US and abroad.

A generalized cloud may not be able to serve all industries or all countries if regulations conflict without severely impacting the ability of other industries and countries to take advantage of the shared resources of the cloud.

Regulations around privacy and protection of data go deeper than the surface, the application. The toughest of regulations require certification of compliance from the application down to the hardware; through the infrastructure. It is at the infrastructure layer – the servers, virtualization implementation, routers, switches, and application delivery network – that the impact of compliance and regulations may be felt by industries and countries for whom these regulations are not a concern.

SHARING MORE THAN RESOURCES

While certain it appears on the surface that additional security and privacy mechanisms in the cloud would be a good thing for all customers, it is the impact that security and privacy implementations can have on the performance and capacity of the cloud that may actually increase the costs to everyone attempting to leverage cloud computing services.

Because the cloud is a shared environment, providers like Google and Microsoft must necessarily be aware that while today a given set of servers and infrastructure is serving up Bob’s Web 2.0 Social Networking and Microblogging Application, tomorrow – or in the next hour – it may be required to run cloudweban application that is more sensitive in terms of privacy and confidentiality, such as health records. While the applicability of regulations such as HIPAA to user initiated storage and transfer of records has rarely been discussed yet, it is only a matter of time before privacy concerns are raised regarding this type of personally identifiable information.

Even a strategy as simple as instituting SSL everywhere in the cloud, to ensure the private transfer of data regardless of its need to comply with governmental and industry regulation, can have a negative effect. The additional compute processing required to handle SSL can ultimately be the cause of degraded performance and capacity on servers, meaning Bob may need to pay for additional instances in order to maintain a level of performance and user concurrency with which he is satisfied. Additional instances cost money, the cloud ain’t really free, and the impact of regulations begins to be felt by everyone.

Financial services, who seem an unlikely customer of the cloud, are highly sensitized to the impact of latency and outages on their business. The additional burden of privacy and security implementations throughout the cloud infrastructure may very well make the cloud a truly hostile environment for such organizations, such that they will never adopt cloud as a viable alternative. Health care and related industries fall under the heavy-handed strictures set down by government regulations such as HIPAA in the US, requiring specific security related to the transfer of personally identifiable information that is not necessarily addressed by today’s cloud computing providers, Google Health not withstanding.

The effects of additional infrastructure and solutions and even cloud architecture designed to appease the needs of governments and industries will affect every user of the cloud, necessarily, because it’s a shared environment. Isolation of traffic, encryption, secure logs, audit trails, and other security and privacy related solutions must be universally applied because the resources within the cloud are ostensibly universally used. Whether an application needs it or not, whether the user wants it or not, becomes irrelevant because it is the cloud provider who is now participating in the compliance process and it must ensure that it meets the demands of regulations imposed across industries and international boundaries. 

THE RISE of the REGULATED CLOUD?

It may be that we will see the rise of regulated clouds; clouds within clouds specifically designed to meet the demanding needs of the myriad governmental and industry-specific privacy and data protection regulations. Regulated clouds set aside – at a premium of course – for those users and organizations who require a broader set of solutions to remain compliant even in the cloud.

The alternative is, of course, to implement a cloud architecture comprising an infrastructure and solutions designed to meet the most demanding of regulations and industry-specific needs. Doing so ensures that all users, regardless of which regulations they may fall under, are covered and need not worry about compliance. But the cost of doing so will not be trivial, and is sure to be passed on to all users one way or another. Such implementations would surely be explained away as “benefits” to all users (See? You get security and data protection *for free*!) but the reality is that the cost will be hidden in degraded capacity and performance that ultimately raise the long-term costs of doing business in the cloud.

With demands from organizations like Epic to shut down Google, and concerns raised by multiple industries on the reliability and security of the cloud in general, we are just beginning to see the impact of what sharing and “international” really means: an increasingly complex web of requirements and regulations. That may very well make the cloud a battle-zone unsuitable for any organizational use until the conflicts between security, regulations, reliability, and privacy are addressed.

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