Cloud Storage for Small Business: 3 Legal Risks

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By Andrew Lu on March 14, 2013 1:39 PM

Nearly 90% of small businesses report they are now turning to cloud and Internet-based services to help them save money and grow their business.

Instead of spending money on things like software and servers, these businesses are turning over their infrastructure and storage needs to the cloud, reports Time.

But while cloud computing and cloud storage certainly offers its benefits, there are also potential drawbacks. For example, with a physical server in your building, you can monitor it and take security measures. But who's protecting your important data in the cloud?

Here's a look at three legal risks related to cloud computing that you may want to be aware of:

  1. Security. While your small business may not make a juicy target for big-time hackers, a cloud storage company that stores private data for hundreds of businesses may be especially appealing to criminals. Tech superpowers like Facebook, Apple, and Microsoft have all been hacked, and hackers may be looking to target large data storage companies next.

  2. Service assurances. Do you have any idea what methods your cloud computing company takes to protect your confidential data? Before choosing a provider, you should understand how information will be accessed, used, and protected. You may then want to weigh these measures against the convenience and cost of cloud storage to see if it is really worth it.

  3. Trade secrets. Trade secrets can be a particularly tricky issue when it comes to cloud storage. Generally, trade secrets must be kept confidential to be entitled to protection. But if you voluntarily share your trade secrets with a cloud storage company, are those trade secrets no longer "secret," legally speaking? And would you want these secrets in the cloud anyway? These are all issues you may want to run by an experienced small business attorney.

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