Here’s Yet Another Headache for Cloud-Computing Providers: Liability

Sony (SNE) announced that it would start to restore its PlayStation Network, following cyberattacks that compromised the personal data of 100 million user accounts. Now it turns out Sony has Amazon (AMZN) to thank for the attacks, at least indirectly. Someone set up a fake-name account with the company’s EC2 cloud service and used Amazon’s massive computing power to wreak havoc.

It’s easy to focus on the impacts on Amazon’s customers and on Sony. But let’s talk potential liability instead. When individuals and companies get hurt, they want someone else to pay, and cloud vendors are frequently the ones wearing the targets. That could mean some major business problems for cloud vendors — even those who don’t consider themselves cloud vendors at the moment.

The cloud as liability

Not that lawsuits have started flying quite yet. But cloud vendors seem to be going out of their way to attract them. Last month, for instance, Amazon’s cloud service had a massive service outage that temporarily crippled such high-profile Web 2.0 businesses as Foursquare, Reddit, and Quora. And this isn’t a one-time event. The same thing happened in 2007, when another Amazon EC2 outage permanently lost some customer data.

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Source: bnet.com

By: Erik Sherman