The cloud is the new Wild West and the need for regulations is desperate. The lack of regulations hinders the growth of the industry. Major players, such as Microsoft, acknowledge this and ask the governments to do their job.

It is strange when a private company, especially one of the largest corporations in the world, wants more government regulations, because private companies usually favor the least possible interference from the state. However, when business suffers from the lack of regulations, even the most devote free market supporters will admit that governments need to interfere.

Why Governments Should Regulate the Cloud?

Cloud computing is not a private business. Its impact on technology and society as a whole is significant. Cloud computing generates revenue, part of which governments collect in the form of taxes. The estimates are that in Europe alone, cloud computing could bring 763 billion Euros in the next 5 years.

Additionally, cloud computing creates new jobs and in this way it helps governments deal with the unemployment rate. This has a tangible social impact and this is why governments should cooperate with cloud companies to help the cloud grow and prosper.

How Governments Can Help the Cloud

Of course, when governmental interference is considered, it is not supposed to be in the form of donations or bailouts. It is good when the state and EU institutions lend socially important technology a hand, as is the case with open source in Norway, or with the FISE Semantic Engine, or with the SCALA programming language, but cloud vendors aren't asking for this. What cloud vendors are asking governments for is legislation and standards, or as Microsoft's Senior Vice President and General Counsel Brad Smith formulates it in a Technet blog post governments can help to:

  1. Develop more balanced and predictable rules governing cloud vendors to enhance legal certainty for cloud services.
  2. Create laws that are more results-oriented by ensuring that regulatory rules measure compliance against desired outcomes, rather than freezing in time the means by which an outcome is achieved.
  3. Facilitate easier movement of data across borders while maintaining legal protection for consumers.”

Cloud computing requires huge investments and when vendors have no legal certainty about their business, they will be reluctant to invest. Also, cloud computing is trans-border, so national governments can't deal with it on their own. Still, it is good that separate countries, for instance Australia or the EU, are taking measures in the direction of legislation harmonization. But the pace at which this is being done is certainly not satisfactory.

Microsoft is not alone in its pleas for more cooperation with the government, so let's hope that soon governments will start playing a more active role in setting the rules of the game.