The term 'cloud computing' describes a whole range of infrastructure, software, data or applications residing in the 'cloud' – that is to say, off your own premises and accessed via the Internet.

A study carried out by the University of Milan, published in late 2010, estimated that cloud computing has the potential to create 1.5 million new jobs in Europe over the next five years. 

The greatest commercial benefit of the cloud is that the services that use it can hone economies of scale by cutting out hardware costs and reducing their costs per unit as demand increases.

For customers, it makes tons of information potentially accessible from any device that is connected to the Internet.

While businesses and governments wax lyrical about the benefits of cloud computing, EU regulators have been more wary, as further take-up of cloud systems would mean a large swathe of public and commercial data would migrate to servers possibly located outside national borders or even on other continents.

Despite the EU's best efforts, laws to protect and store data are outdated and cannot cope with the legal problems presented by cloud computing, such as determining who owns data which is no longer handled in situ.

When a company processes data in the UK, stores it on a server in Ireland but sends it via France – as it may have a subsidiary there – it is not yet clear which country's law would prevail in a legal dispute.

Regulators who have recognised this maze of unanswered questions are busy consulting industry and data protection authorities, while industry is busy trying to make its mark on an as yet unformed legal framework.

In November 2010, EU Digital Agenda Commissioner Neelie Kroes called for cloud-computing providers to build data security into their services and products. And at the 2011 World Economic Forum in Davos, she said the EU was working post-haste to update its data protection rules.

The Commission will consult with industry and data protection authorities this year before releasing its cloud computing strategy in 2012.

http://www.euractiv.com/en/innovation/cloud-computing-legal-maze-europe-linksdossier-502073