Did the Feds Just Kill the Cloud Storage Model?

Reprinted from Washington’s Blog (January 21, 2012)

Megaupload Type Shutdowns and Patriot Act Are Killing Cloud Storage

The government’s takedown of the 800 pound gorilla online storage site Megaupload may have killed the cloud storage model.

Many innocent users have had their data taken away from them.

As PC World notes:

The MegaUpload seizure shows how personal files hosted on remote servers operated by a third party can easily be caught up in a government raid targeted at digital pirates.

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Before its closure MegaUpload had 180 million registered users and an average of 50 million daily visits, claimed a total visitor history of more than one billion, and accounted for about four percent of all global Internet traffic….

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Take, for example, Videobb.com, a site that appears to be similar to Megavideo. Videobb bills itself as an ideal place to share videos without ever having to worry about “disk space or bandwidth again.” Videobb is “safe, secure and easy” the company says, and that’s probably true; at least unless the FBI and the Department of Justice decide that videobb is ripe for a takedown. Behind the scenes, videobb is rife with pirated content just as Megavideo was.

A quick check of sites that index pirated content shows you can find recent episodes of The Big Bang Theory, Modern Family, and the recent movie Contagion available for free streaming on Videobb.

Videobb isn’t alone, either; services such as Novamov, ZShare, and VidXDen all offer file-sharing services similar to Megavideo and all of them are being used (or at least have been used) to distribute pirated content. The trick is that you won’t see the pirated content on these sites’ front pages; you have to know how to access it through third-party sites that contain links to the secret files.

If you use any of these sites to store or distribute your own non-infringing files, you are wise to have backups elsewhere, because they may be next on the DOJ’s copyright hit list.

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Keep in mind that when you use these services you also make it easier for the government, and possibly hackers, to peer into your files without your knowledge — but that’s a discussion for another day.

Bottom line: if your cloud service offers file storage on the front end and shows pirated video out the back, don’t be surprised if your files vanish one day.

In other words, the government is exercising the power to seize all of the legal property held in a storage facility because a handful of crooks have illegal property in theirs.

And if that’s not enough to kill your enthusiasm for cloud storage, CIO points out:

Worries have been steadily growing among European IT leaders that the USA Patriot Act would give the U.S. government unfettered access to their data if stored on the cloud servers of American providers—so much so that Obama administration officials this week held a press conference to quell international concern over the protection of data stored on U.S. soil.

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Anxiety was heightened last year when a Microsoft UK managing director admitted that he could not guarantee that data stored on the company’s servers, even those outside the U.S., would not be seized by the U.S. government.

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Escaping the grasp of the Patriot Act, however, may be more difficult than the marketing suggests. “You have to fence yourself off and make sure that neither you or your cloud service provider has any operations in the United States,” explains [Alex Lakatos, a partner and cross-border litigation expert in the Washington, D.C. office of Mayer Brown], “otherwise you’re vulnerable to U.S. jurisdiction.” Few large IT customers or cloud providers fit that description in today’s global business environment. And the cloud computing model is built on the argument data can and should reside anywhere around the world, freely passing between borders.

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So, what’s a European cloud customer to do—or, for that matter, a U.S. customer anxious about how their cloud provider might respond to a government request for data under the Patriot Act? Cloud and other technology service providers have a mixed record when it comes to keeping customer data out of government hands. “For the cloud service providers, their life may be easier if they give the government whatever it’s asking for,” Lakatos says.

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