Sunday, January 24, 2010

After follow the moon, Avoid the law

After the follow the moon green trend for cloud computing. Companies are finally catching up to the potential of cloud computing to avoid constraining law and tax systems: like this company from india .

Companies will soon realise that they can leverage cloud computing the same way they use off shore accounts and tax heavens. Not only they will be able to dodge  "optimize"  taxes but also they will be able to avoid limitating law systems by moving the data or the processing of data in a less restrictive location.
Currently, governments force companies to maintain their data on the  country soil in order to control its use through legal means. However, it is really easy to move compute loads with the cloud to where the legal and regulatory environment is more favourable, while  leaving  the  data where it is. 

How fast the law will catch up? Not fast enough. And the problem gets worse when you think that the law system will need to be harmonised at a planetary scale to of any use. I already foresee country creating data and processing taxes heaven law in order to attract cloud providers and their customers. The same way Ireland slashed its corporate taxe to attract company on its soil.

By allowing  to access, store and process data  in a  fast,  seamless and transparent way, the cloud is creating a legal void that companies will exploit in order to maximise their profits and minimize their exposure. How long will we have to wait for cloud providers to advertise their new features :  legal cloud  location zone? Already been done :
According to Microsoft, the geolocation feature is also necessary for legal reasons since many Azure users apparently have “requirements on where they can place their code and data and where they cannot.” 

I think their is a burgeoning  market for IT consultants and lawyers in legal IT optimization  strategy.