Competition Watchdog Slams British Cloud Providers

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Several major cloud providers accused of breaking consumer law by altering contract terms without notice

The UK’s top competition watchdog has issued warnings to several major cloud providers following concerns that the firms may potentially be breaching British consumer law.

The Competition and Markets Authority (CMA), cited a number of concerns with cloud contract terms and practices, specifically the ability of service providers to change the service or terms of the contract at any time, for any reason and without notice.

Cloud Complaints

But the CMA is also concerned about service providers suspending or terminating contracts without notice for any reason, and automatically renewing a contract at the end of a fixed term without giving notice or withdrawal rights.

It was back in December 2015 when the CMA decided to launch an official review of compliance with consumer law in the cloud storage market. It said it was prompted to begin the investigation after consumer complaints about the price and service changes for cloud storage.

nokiaConsumer complaints to the CMA included practices and terms being in place by providers that breach consumer law, such as customers being lumped with “significant” price hikes along with drastic reductions in cloud storage capacity after contracts had been agreed.

After its investigation, the CMA noted that around 3 in 10 British adults use cloud storage in a personal capacity. The majority benefit from free services that come with their devices such as smartphones and tablets and consumers are generally satisfied with their services, it said.

But the CMA also noted the complaints and published an open letter for cloud providers, advising them to review their terms to make sure they are fair for consumers. It also said that service providers need to ensure that consumers get necessary information before they buy.

“Our review found that people find these services really valuable,” said Nisha Arora, CMA Senior Director, Consumer. “However, we also heard some complaints resulting from unfair terms in contracts. If left unchanged, these terms could result in people losing access to their treasured possessions or facing unexpected charges.”

“In this rapidly-developing market, it’s important that we act now to ensure that businesses comply with the law and that consumers’ trust in these valuable services is maintained,” said Arora. “We welcome the fact that a number of companies have already agreed to change their terms, and expect to see improvements from other companies.”

It said that Dixons Carphone plc, JustCloud and Livedrive have already committed to provide fairer terms for their cloud storage customers.

Cloud Challenges

The cloud has become a hugely popular option for both the consumer and enterprise markets. But there are challenges.

Earlier this week for example analyst house 451 Research called the cloud provider ‘race to the bottom’ in pricing a red herring, with the supply of high value services the only way to ensure long-term growth for cloud vendors.

And securing the cloud has also proved to be a challenge in recent years, in light of the worsening security landscape.

Last month a report from Intel Security claimed that the UK was lagging behind other countries when it came to cloud adoption. It found that whilst the average organisation is using 43 cloud services, the UK ranked slowest in terms of cloud adoption with an average of just 29 cloud services in use per organisation.

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Author: Tom Jowitt
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