The CLOUD Act what does it mean for Global Businesses

The CLOUD Act: what does it mean for Global Businesses

A United States federal law enforced in 2018 by passing an executive agreement on access to data by

Published By - Debra Bruce

What is CLOUD Act?

A United States federal law enforced in 2018 by passing an executive agreement on access to data by foreign governments is known as Clarifying Lawful Overseas Use of Data (CLOUD Act) Act.

The CLOUD Act allows the federal law organizations to ask for data stored via subpoena or warrant to tech-based companies in US irrespective of where the data is stored.

This Act works as an amendment to the previous Stored Communications Act (SCA). Federal Bureau Investigation (FBI) faced difficulties in acquiring the data with the SCA, and this act came into action to simplify the process of acquiring the data.

What are the provisions of CLOUD Act?

The CLOUD Act gives the following rights:

  • It can authorize the police to eavesdrop on the communications from the US Companies without obtaining a warrant.
  • It allows the US President to sign an MLAT (Mutual Legal Assistance Treaty) with foreign countries to demand the data stored by their CSPs (Cloud Service providers)
  • It also allows the MLAT countries to obtain data stored in the US without a judge’s notice unless the data is of a US citizen.

The Impact of CLOUD Act on Global Businesses

The Cloud Act hasn’t simplified the complications arising in the cloud space despite its intentions to solve the same.

One of the first things as per the amendment is the acquisition of the database of US-based companies irrespective of where it is stored.

The Cloud Service Providers (CSPs) understand the difficulties in acquiring the data stored on the foreign soil. For example, let’s look at the case which forced the US government to impose CLOUD Act.

Microsoft (A CSP) went into court battle against the US federal government over the data stored in Ireland. As Microsoft is not obliged to hand over the data stored on the foreign soil unless that country asks Microsoft to hand over the data; it creates a lot of confusion over the storage of data and limits the horizon of the amendment.

In order to nullify the threat emerging from this scenario, there was another provision in the act which allows the US president to sign an MLAT with another nation which eases the process of handover of the data.

The CLOUD Act has impacted the multinational businesses in a way that the cloud storage in different may become difficult and the CSPs may have to compromise with the user data privacy in the matter of national interest but there’s still the possibility of misuse and/ or manipulation of the user data by political parties for their own benefit.

Key Takeaways:

US-based tech companies will have to carefully monitor the storage of the data irrespective of the storage location and tackle the possibility of data manipulation by the federal institutions.

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