AGORA DSI & CIO - The Legal Minute - 9 November 2023

The negotiation or renegotiation of Cloud contracts in the light of the opinion issued by the French Competition Council on 29 June 2023 on the "cloud computing" market, the draft European Data Act and the draft law to secure and regulate the digital space.

The subject of today's legal minute is the negotiation or renegotiation of Cloud contracts in the light of the opinion issued by the French Competition Council on 29 June on the 'cloud computing' market.

As well as the general difficulty of negotiating contractual terms with the major cloud providers, you are all faced with the difficulty of anticipating their future costs at the time of contracting.

The Competition Council has identified a number of factors:

• the complexity of the products on offer and the lack of clear pricing information;
• short-term gains or "free" services linked to underlying purchases that are less easy to decipher;
• for SaaS services, whether or not to host services in a competing cloud?
• for IaaS services, where the price is proportional to the volume of data transferred, the cost of using tools that are not on the cloud, but that need to have access to the data in the cloud in order to work.

Aside from visibility on the costs of the run, the question of reversibility is the poor relation of the negotiations.

The major Cloud providers often offer free services at a time when customers are making structuring choices, while deferring part of the costs "on exit". This represents a challenge for customers wishing to migrate workloads with a view to changing supplier or deploying a multi-cloud architecture.

Their technical and commercial practices contribute to customer lock-in. This may involve using a proprietary language to reduce the ease of interaction between systems, implementing a specific data format to prevent data portability, or charging various exit fees, such as data transfer fees, change of supplier fees and migration fees.

According to a recent study by Cloudflare, the fees charged by some providers can be up to 80 times the actual cost.

The draft European Data Act and, at French level, the draft law to secure and regulate the digital space, which anticipates the adoption of the Data Act, address these issues:

• transfer charges are limited to the costs incurred by the supplier,
• compulsory assistance from the supplier in implementing reversibility,
• free provision of interfaces and associated documentation,
• export of customer data and digital assets in a usable format, including configuration parameters and security settings.

This is a piece of legislation to keep an eye on, with perhaps the opportunity to seize new rights. In the meantime, we encourage you to negotiate these issues in advance or at the time of renewal.