Competition Summit 2011 Dec 1,2 Note – pertaining to technology strategy and global cloud comput

Support of legal Counsel. EU.

Summary Key Issues over Competition/anti-trust and Cloud Computing

Key Areas for Portability and Interoperability

Data portability issues are similar in many ways to application interoperability issues that relate to the interchange of data, and it is convenient to consider data portability and application interoperability issues together. Cloud computing uses established network and Internet protocols at the platform and infrastructure levels, and introduces no significant new platform or infrastructure interoperability issues. This report therefore considers cloud portability and interoperability issues under the following four main headings.

• Application Portability

• Platform Portability

• Application Interoperability and Data Portability

• Environment Interoperability.

• Bundling software and hardware

• The issue over the practice of using IP and other means (productization) to bundle services and products into a cloud offering

• Benefits but also concerns over share of market exploitation, unfair competitive practices

• Maturity of Open Standards

• Open Standards are aimed to be vendor neutral. In theory they enable portability and interoperability exchange of messaging and IT resources, independent of the underlying technology. Examples include:

• OCCI – Open Cloud Computing Interface – Open Grid Forum (OGF)

• CDMI – Cloud Data Management Interface – Storage Networking Industry Association (SNIA)

• OVF – Open Virtualization Format – Distributed Management Task Force (DMTF)

• OCI - Open Compute initiative- The Facebook initiative to public the Data Center specifications for computer rack design and green compliance , using open source components and standards

• OpenAuth, OpenID - Open Identification

• UDEF – Universal Data Index format - The Open Group

• Vertical Industry Schema for message service exchange e.g. SWIFT, STP,

• Beyond this there are schema notations for

• BPEL – Business process execution

• TLC, SSL message transport

• Currently there industry standards for semantics

• Portability and Interoperability in Cloud services

• Proprietary standards for Storage, Compute and network both define what can be done but also limit what flexibility an choice is available

• Portability is the physical and logical movement of IT services from one location to another. Interoperability is the flow of services across different locations.

• The issue of lock-in and lock-out of using cloud services

• Portability – or lack of it, with regard to

• Data Portability – being able to move your data to other clouds or hosting easily. Specifically. How to treat your data as your own and use any/or specific cloud service with this data

• Application Portability – being able to move your application and run it on multiple devices, platforms (The Operating system and Instance/tenancy configuration of your service in the cloud) and commercial environments (the overall commercial service and arrangements)

• Platform Portability – the ability to move your platform configuration from one provider/vendor to another or to your own environment. A highly visible example of this is Device portability e.g. Apple OS and Google Android applications are typically not portable between these platforms and have to be built for each platform configuration. An example of this also is the portability if virtual containers from one platform provider to another platform provider

• Interoperability – or lack of it, with regard to

• Application Interoperability – the ability to interface and integrate applications across different cloud and hosting platforms and environments. In particular how applications can be interfaces through the APIs at the application tier seen in web service exchange and in mashable integration as the application level. Often applications may not be interoperability due to closed API schema or the use of bundled applications specific to a platform and infrastructure environment (closed)

• Platform Interoperability – the ability to connect the Virtualized containers , Operating system and instance management with other instances and other cloud platforms. Integration at this level is the platform resource API.

• Infrastructure Interoperability – the ability to interface and integrate across different technology infrastructure layers. Typically this is at the integration at mac address, IP and technology specification level. Specific blades, servers, application code and network level.

• Environment Interoperability – how semantics between different commercial and vertical market environments can be handled to enable exchange and integration of cloud services from one environment to another. This can include political, commercial and organizational boundaries and issues which can also affect portability.

• Data Center and Network Topology control and management

• How Network services and communications bandwidth and Data Center availability performance is managed

• The “30 km, 100 km rule” – the certification of Data Center pairs (high availability, DR fail over and archive) and network performance certification is typically reached between 30k and 100km distance. Specific design issues have to be covered in the network and data center pair design. In this way we cover a Country through specific IT services based on a mesh of

• This affects how the services are connected and enabled across a geography domain. Technology topology limitations both enable dominance and restrict access the quality service

• Regional country policies

• Intergovernmental law differences

• Gateway platform controls

• How Cloud catalogs and services are managed

• What open or closed commercial and licensing agreements d they have

• Investment “size”

• The scale and resource clout, power of providers / consumers

How is Cloud Technology changing competitive advantage and differentiation / barriers ?

Note on Competition Summit 2011 Scope

12.A. Cloud Computing: Picking the Market Lock-ins . Understanding power and dominance in the cloud computing industry . Cost of moving from cloud to cloud: what are possible “customer lock-ins”? . Cloud vendor platforms and potential technology lock-ins for developers? . Can software license programmes fall under the scope of antitrust? Can Open Source platforms be concerned? . Exclusion of specific providers from popular cloud applications stores > Kevin Mercer Head of Legal Affairs (EMEA); Associate General Counsel CIENA CORPORATION \ UK > John Moss Vice President, Deputy General Counsel and Head of Commercial Practices SALESFORCE.COM \ USA > Isabelle Roux-Chenu Group General Counsel CapGemini \ FR

Chair : Andreas Tegge President, Digital Economy Policy Group DIGITAL GROUP

Specific Issues

. Understanding power and dominance in the cloud computing industry

• How the Cloud business model is integrated with the business model and the economic model – the macro and micro economic model factors. – how it is changing the business – IT relationship

• The World Economic Forum Report – May 2009 stating it was a game changer

• Large scale public clouds – US based

• Security threats of online use and cyber crime

• Shift to collaboration and mobile services

• Shift of online data and consumer habits

• Issues

• Legislation of governments pushing against each other

• Security and rights to access

• M&A commercial controls

• The first mover advantage to get foot hold on channel/gateway

• Use of closed standards to control platform access

• Dominance of channel brand and economies of scale gateway control

• Power of large clouds – using IP and protection of platform ecosystem

• Use of Litigation to control competition

• Interoperability and portability issues limiting, or enabling markets and competition?

• Open source benefits but compromised by bundling

• Lock in and lock out issues of business cloud

. Cost of moving from cloud to cloud: what are possible “customer lock-ins”?

• Increasing potential cost of change due to portability and interoperability issues

• Portability

• Data Portability lock-in

• You may have limited control over the use of your data and its search parameters

• E.g. Facebook security setting

• E.g. Google search algorithm weighting bias towards advertizement monetization model

• You may not be able to move data once loaded and encoding into a SaaS or PaaS solution

• E.g. Configuration of Microsoft Azure and Salesforce,com Force.com

• Application portability lock-in

• You cannot move application code and services allocated to your account to another typically. Current software modules maybe limited to versions and tenancy

• For a customer there account is in effect tied to that vendor service.

• But an off set benefit can be the shared maintenance of the cloud environment

• Encapsulation of the application configuration standards is typically defined in the SOE and POD specification (Standard Operating Environment , Platform Operating Definition or Instance specification designation.) How these are portability may be limited by the Provider service conditions

• For a customer the cost of migration away from that cloud vendor may be prohibited.

• E.g. Google+ provide a portability option of your data.

• An example of multi-tenancy may enable compatibility of the service with other similar ecosystem applications in their platform

• Licensing conditions prevent movement to alternative platform provider or user group.

• Seek licensing laws that enable reselling, reuse, rental

• Platform portability lock-in

• The ability to move the customer data and solution to another platform configuration. This is typically defined by the Operating system, Chip Instruction set (X86 or nonx86)

• E.g. move a Windows OS service to Linux OS service platform

• Environment portability lock-in

• The development of commercial arrangements that limit movement of capacity

• Limitation of legacy application hosting to use cloud environment

• E.g. move an Amazon service to a Rackspace service.

• Should gateway portability be mandated as a prerequisite of all vendors?

• Interoperability

• Application Interoperability

• Difficulties in integrating SaaS to SaaS and SaaS to non SaaS environment beyond own Vendor integration PaaS service

• E.g. application equivalence on two different systems

• E.g. application connectivity through API control

• Platform Interoperability

• The ability to use

• Infrastructure Interoperability

• Current Hypervisor technology many support multiple platform multiplexing but is typically limited to same resource pool controls.

• E.g. cloud switch vs Virtuastream / Racemi / Servicemesh / Gogrid etc may have specialized infrastructure and application workloads management typically

• Ecosystem lock-in

• Code development lifecycles still developing in maturity making the customization of the application typically for that specific implementation.

• But using Multi-tenancy it may be possible to leverage the Cloud ecosystem to gain reuse benefits

• Buyer lifecycle and contract negotiations may be limited to services roadmap of vendor suppliers and their ability to manage their ecosystem

• Restricted use of the cloud service

• Comparing “apples and oranges” problem

• Inability to compare cloud catalogs and pricing benchmarks

• E.g. compare Amazon AMI to a VMware VMI ? what criteria ?

• Cost of service failure

• Impact of service failover often underestimated

• Often Customer left to sort out the DR and recovery of a service

• Customer left with responsibility of backups

• No contracted service levels with some public clouds

• Lack of Home market choice

• Lack of local country owned clouds

• Trade-off of technology and features often commercialized in favour of the source owner

• E.g. originated in home territory and moves out over seas

. Cloud vendor platforms and potential technology lock-ins for developers?

• Threat of Litigation

• Use of IP ownership to control market monetization rights

• Proprietary code standards create lock in potential

• Specific implementation code for applications and infrastructure resources

• E.g. Amazon and Microsoft specific implementation code environments

• Restricted practices for Platform hosters stating code certification for developers

• Imposing standards for SDK environments

• Portability of code limitations

• Developers are limited to coding for an Operating system and the cost of recoding to a new OS

• Open Source portability leverage

• Using Open standards for portability of containers may enable movement of development but may not be widely supported

• Costs of Maintenance and product development lifecycle mindset

• Moving to cloud development means adopting a product lifecycle mindset and continual maintenance program to assure availability.

• This may increase overhead costs of maintaining the cloud environment if not amortized over sufficient usage

• This may increase overhead costs of maintain multi-tenant version control.

. Can software license programmes fall under the scope of antitrust? Can Open Source platforms be concerned?

• Litigation as a competitive weapon

• The use of IP relating to ownership is a signification issue- see case studies

• Use of licensing to control ecosystem reuse

• Practices of reselling licenses as a reseller model is gaining ground

• API ownership dominance

• Practice of trying to Patent IP and other core internet standards

• See Google API legal case.

• Open Source licensing cab be mixed with proprietary code creating difficulties in understanding ownership responsibilities

• Open source in cloud is a significant strategy to create alternative commercial models

• E.g. OpenStack (open source cloud management system), Eucalyptus (Amazon cloud equivalent)

• Bundling features

• Cloud is about catalog functions. But this can be used to create a backdoor method to ship extra functions which can undermine competition in a market.

• E.g. Microsoft practices of added extra features in their OS

• Platform monopolization

• Use of controlling the platform “standards” to control usage and membership

• Difficult to respond without alternatives

• E.g. Apple preventing Adobe Flash

. Exclusion of specific providers from popular cloud applications stores

• Certification process

• Apple have controls over publication

• Amazon control publisher rights to use their platform

• Ownership of the channel gateway platform

• Apple , google, Amazon and many of the popular providers control their gateway access and channel use.

• It is noticeable that Google has trouble n establishing a foothold in the TV market, because of technology learning curve effects , but also impact of different media channel they do not own (Internet – browser has no such barrier)

• First mover advantage

• USA based public clouds and most all of the major cloud providers are USA based, with USA based legal process.

• A second effect is technology leadership and “first to market of next idea” through this dominance

• Overseas ownership control

• Location of data and overseas ownership has concerns over

• Proprietary APIs

• Google and Amazon and other popular vendors control their APIs

Evidence of Competition / Anti-trust issues from Cloud Computing

Business Environment Interoperability barriers

Litigation and Patent Trolling Common industry standards - Apple-Samsung Patent Battles

• Apple and Samsung Patent battles are alarming Brussels

• Development of suppliers using IP law suits in areas that are common Industry standards to enble whole market to function.

• http://www.ft.com/intl/cms/s/2/f9ce32ca-0705-11e1-8ccb-00144feabdc0.html?ftcamp=rss#axzz1d31Ak22C

• Yahoo patent ownership versus Facebook

• Use of patents defensively or offensively

• Value of Yahoo patents in stopping competitors (usage charging)and

• http://www.forbes.com/sites/ericjackson/2011/11/07/the-owner-of-yahoos-patents-could-cripple-facebooks-ipo-aspirations/

• Overture suing Google 2002

• Overture began aggressively suing Google for violating their GoTo.com patent with the AdWords model (U.S. Patent No.6269361 aka the ’361)

• http://www.totaltele.com/view.aspx?ID=399070

• Motorola Mobility Suing Google

• Motorola Mobility (MMI) that can use patents to get companies like Google (GOOG) over a barrel and force them to pay a pretty penny for them: $12 billion in that case. The internet space has patents and they could be the next big land grab area that few have bothered to pay attention to.

• http://www.theverge.com/2011/08/15/google-motorola-patents-for/

Government Data Protection Policy Issues

• European data concerns cloud outlook for US vendors

• http://www.networkworld.com/news/2011/091611-european-data-concerns-cloud-outlook-250988.html

• American cloud providers may find themselves unable to sell to the Dutch government due to concerns that the vendors could be compelled to share data with U.S. authorities under the provisions of the Patriot Act. Similar concerns are being raised in the European Parliament.

• EU upset about Microsoft warning over EU Cloud

• Issue of Microsoft being compelled by US law to had over data that was EU origin

• http://www.computerworld.com/s/article/9218167/EU_upset_by_Microsoft_warning_on_U.S._access_to_EU_cloud

• G-Cloud culture change that set to rock way we do public sector ICT

• http://www.publictechnology.net/sector/central-gov/g-cloud-culture-change-thats-set-rock-way-we-do-public-sector-ict

• “In government terms our starting point is around the commodity element of the Cloud. We want it to be more easy to exploit commodity ICT services, to buy them as we need them, to flex up and down and to do things once and then share across communities. We need to get that mantra of reuse in place as a fundamental concept of the Cloud. But we do have a culture in place with thousands of people who have grown up being used to creating a unique solution top to bottom for every problem.”

Data Portability Barriers

Database Portability and Interoperability

• Ellison Reveals Oracle’s Public Cloud; Calls Salesforce The ‘Roach Motel’ Of Cloud Services

• http://techcrunch.com/2011/10/06/ellison-reveals-oracles-public-cloud-calls-salesforce-the-roach-motel-of-cloud-services/

• This article highlights an interesting interoperability issue. Oracle calls their flavor of cloud to be public, yet is appears to use a SQL based database as the back-end which enables data movement between their cloud and the datacenter hosted DBMS servers. However they also say that the “applications” can be moved to the Amazon cloud. This begs the question whether or not it is feasible to move the Oracle DBMS to the Amazon cloud also, without choking the network.

• It might be worth exploring the various Use Cases for moving data between SQL based databases (e.g. Oracle) and NoSQL based applications, which are predominant on the Amazon cloud. Raugh, Jeffreyjeffrey.raugh@hp.com

Platform Portability and Interoperability

Open Source is also suffering from lack of standards to connect with other services Open Source and Interoperability

• OpenNebula start new initiative on Cloud Interoperability and Portability

• http://blog.opennebula.org/?p=1893

• http://cloudcomputing.sys-con.com/node/1986512

Open Data barriers

Government development of Open Information Standards and Services

• EU sets 2013 deadline for open Data Portal

• http://www.readwriteweb.com/hack/2011/09/eu-sets-2013-deadline-for-open.php

• http://cordis.europa.eu/fp7/ict/content-knowledge/docs/report-ws-pan-eu-dat-porta_en.pdf

• This looks interesting for Europe, public data mining

• In second part about Open Data standards and pdf, W3C where involved , looks interesting, don't know if this is happening in US

• Makes alot of sense with all the different european inter-country data

• See section 5 on the pdf, has a good list of the challenges to creating a pan-european data portal.

• Interesting how they are focusing on Vertical Industry data sets

Application Portability barriers

Legal Issue of Software Definition and Reuse by Lawyers

• Microsoft win legal overturn

• Device and software patent law

• http://betanews.com/2007/04/30/microsoft-wins-in-supreme-court-at-t-ruling-overturned/

• independence of software on the device. Can not bundle the software , as each software may have its own IP protection.

• Means OSI software can be bundled and not be controlled

• Judge ruling on Google and Oracle API specifications

• Legal Definition of what is an API

• http://www.readwriteweb.com/hack/2011/09/judge-neither-google-nor-oracl.php

Technical Certification Issues

• AWS get Federal certification

• http://www.networkworld.com/news/2011/091511-amazon-web-services-receives-critical-250944.html

• Amazon on Thursday said that many of its Web services now have a crucial certification that allows federal government agencies with strict security requirements to use the services.

• Amazon's Elastic Compute Cloud, Simple Storage Service and Virtual Private Cloud have all received Federal Information Security Management Act Moderate Authorization and Accreditation.

• Some federal agencies are required to only use services from companies that have certification under FISMA. More than 100 government agencies are already using Amazon's offerings, including the Department of the Treasury's Treasury.gov, the Jet Propulsion Laboratory at NASA and the Federal Register 2.0 at the National Archives. But the new certification opens the door for Amazon to extend its offerings to additional agencies and applications.

• Amazon Web Services already has other key security clearances, including FISMA Low, FIPS 140-2, PCI DSS Level 1 and others. The services can also be used by businesses that must comply with regulations set in the Health Insurance Portability and Accountability Act.

Platform Interoperability Barriers

This relates to Developer barriers

Technical API Issues relating to Interoperability/Portability

• Google + API announced Sept 15

• http://www.readwriteweb.com/archives/just_the_beginning_google_plus_api_made_available.php

• Impact on app developers using the API, Google policies for using the API etc

Technical Transport Layer Network pass through encryption TLS v1.0

• The Open Group dokuwiki server and access to external resources through their APIs

• Note on problem using extension resources with google-visualization API

• https://wiki.opengroup.org/councils-wiki/doku.php?id=workgroups:cloud:project_reporting

• The other link above provides embedded code that is using the Google-Visualization-API

• http://code.google.com/apis/chart/

• The open Group server uses 256byte encryption however this extension API uses other resources that are not as secure.

• The server does not support TLS renegotiation extension. As a default the server locks out the page to read only and can not be edited.

• There is work by the Internet Engineering Task Force IETF February 2010 on developing a standard Secure Socket Layer (SSL) and Transport Layer Security (TLS) renegotiation are vulnerable to an attack in which the attacker forms a TLS connection with the target server, injects content of his choice, and then splices in a new TLS connection from a client. The server treats the client's initial TLS handshake as a renegotiation and thus believes that the initial data transmitted by the attacker is from the same entity as the subsequent client data. This specification defines a TLS extension to cryptographically tie renegotiations to the TLS connections they are being performed over, thus preventing this attack.

• http://tools.ietf.org/html/rfc5746

• http://www.rfc-editor.org/info/rfc5746

• The sever uses HTTPS (SSL or TLS-protected resource). This seems to have access problems.

• The concept could be in the trust mechanism for the HTTPS server.

• The concept of certificates and PKI is around the use of trust certificate authorities CAs.

• I found a note on cURL code in pHp does not support the CAs it which not access the server.

• The issue seems to be a broader one around the Transport Layer security

• http://en.wikipedia.org/wiki/Transport_Layer_Security

Infrastructure Interoperability barriers

Technical Hypervizor Issues relating to Interoperability/Portability

• Citrix - EC2 Amazon Interoperability (submitted by Jeffery Raugh, Hp)

• In a separate development, after the financials were announced, Templeton announced that Citrix has inked an interoperability deal with Amazon to make its EC2 cloud, which is based on a homegrown variant of the Xen hypervisor, play more nicely with the commercial version of the XenServer hypervisor. This includes not just hypervisor compatibility enhancements, but also tweaks so the XenServer management tools can reach out into the Amazon cloud. Citrix will also work with Amazon to help tune Microsoft's Windows operating system to run better on the EC2 cloud, and the two will collaborate on disaster recovery, security, and compliance tools that span EC2 and XenServer clouds

• Here is the full article: http://www.theregister.co.uk/2011/01/27/citrix_q4_2010_numbers/

Technical OS Issues relating to Interoperability/Portability

• Microsoft windows 8 - Samsung and IOP (submitted by Mark Skilton , Capgemini)

• Excerpt: However, combining the different technologies and user experiences of both PCs and tablets in a single software platform presents a complex test, analysts warn …… Microsoft will have to make its operating system function for the first time on different chips, while also creating a way for developers to write software that works with different interfaces.

• Presumably the User Experience and the devices will need to be portable? UI and UE are aspects of IOP/portability , aesthetic and kinesthetic measurement, or you have a different service levels/rate cards for different blends of configuration and users experience ? How to build marketplaces / Apps/resource stores and ecosystems membership and compliance.

• Original link (please observe copyright) http://www.ft.com/intl/cms/s/2/a4f3fcd6-dc89-11e0-8654-00144feabdc0.html

Technical Programming Language Issues relating to Interoperability/Portability

This is more related to the challenge of developing Cloud applications that use the capacity and network distribution of the internet. There are a number of research efforts trying to tackle a new OS for this.

Currently the “problem” is all your data, the application and the instance are “locked” nside a Operating syste instance container. You are locked to that vendor platform. VMware are recognizing this and have been developing better fine grained resource usage. Other Vendors specialize in portability of Virtualized instances over platforms

• Google - development of DART - Structured Web Programming Language - is it Anti Competitive ? (Submitted by Mark Skilton, Capgemini)

• http://www.readwriteweb.com/hack/2011/09/is-google-being-anti-competiti.php

• Is the development of a structure web programming language enabling Google to develop a different class of program interpreter and Virtual machine into Google Chrome and they by deliver services. I this impacting competitive balance in industry?

• http://www.readwriteweb.com/hack/2011/09/google-confirms-hints-dropped.php

• http://news.cnet.com/8301-30685_3-20103843-264/google-to-debut-dart-a-new-language-for-the-web/

• Excerpt: The interesting thing about Google is that it has enough programmers on staff creating enough in-house software that the company can single-handedly make a programming language at least somewhat relevant. And because it's got such a vast computing infrastructure, anything that increases the efficiency of power consumption, or improves the flexibility of the computing foundation, can pay off directly in lower electricity bills and higher reliability. In other words, even the very academic subject of programming languages can be a very practical activity at Google.

• So the value add could also be “efficiency” for cloud resources for large scale cloud providers etc

What should Capgemini Recommend?

Summary

The ICT industry is going through a transition to on demand services , while there is still much to do on standards, there needs to be a level playing field for consumers and country providers.

• There needs to be channel management

• There needs standards for portability and interoperability

• There needs to be broker and orchestrator services to enable

• Choice

• Flexibility

• Added value

• There needs to be more friendly to consumer licensing practices

• There needs to be improved security and SLA management requirements from Cloud vendors.

• Country regions like EU need to consolidated effort to create better network and public cloud services for cities and business markets to counter West and East competition threats

• From the list we should monitor and speak on as first priority the 2 and 3 around customer lock in and developer lock in. this plays well to our hand for providing agile , responsive cloud services which enable flexibility and choice of best cloud solution. Our skill is in being able to blend services and choices. Ive have done much on Cloud standards around security and Interoperability and portability Im leading in The open Group and can summarize this state. I also have info from Kemp Little a technology legal firm Ive co presented with on this subject which I’ll pull out the relevant employment law and legislation issues of cloud connectivity for you.

• We should also focus on Cloud Broker, Orchestration model this is the Capgemini Immediate story + the ICS journey we are currently moving into 2012. More importantly it is our strategic heritage and what we can do in a market that has huge public cloud first movers, many disparate countries and legislations to deal with (the 30 - 100km Network rule.. will explain in note later) and the significant spread of Asian and industries that can development large scale clouds. What many of the “long tail” customers, (that’s the vast majority of us) want is the ability to connect and be secure and be able to integrate across vendor choices. This is the 1. Point about the power and rise of cloud vendors in the local, regional and global markets.

• A 3rd area might be Outsourcing-Offshore impact of Cloud. Capgemini needs to be able to level a “network of clouds” which may be our pwn or 3rd parties. It needs to be able to connect and develop services for specific markets and industries. This shape fits the customer and market views that need to grow and develop innovation and on-shore presence

The Patriot Act versus safe hardor, the IP patent litigation as a monetization strategy; the level of open source blending in architecture and the blending of catalogs is an issue for competition law as seen with Microsoft, IBM and is a tactic. The apps store thing is a bit like the Ofcom issue of Teleco in the UK market deregulation in 2004/5. The challenge is how to open up clouds for users but not kill off the vendor pipeline. IT is not like electricity utility totally because it can contain service types.

Macro and Micro Economic Monetization Strategies for On-Demand Business (Source: SyntheticSpheres) Mark Skilton, CloudExpoWest Santa Clara , Nov 20

Kemp Little LLP

Note on Employment Law Nov 2011

• Contract obligations of provider services – what precedent for cloud providers

• Restrictive approaches to immigration

• Security threats of employees using cloud for social and other reasons

• Data protection act

• Issues over NSP, ISP enforcement of Copyright law infringement

• Liability of employer and employee

• Reputational issues

• Monitoring and tracking use of cloud, data ownership

• Social media usage threats

• Reputational issues

• Taylor v Somerfield

• Preece v Wetherspoons

• Ownership

• Who owns a twitter account?

• Who owns the contacts on LinkedIn?

• Hays v Ions

• Practical Suggestions

• Non-dealing restrictive covenants

• Social media policy

• Provisions in contracts of employment?

• Counsel employees on what is appropriate

• Date Protection Act

• Key principles:

• proportionality

• impact assessments - alternatives to monitoring

• provision of full information to employees

• technical/security measures

• Human Rights Act

• Article 8 – right to respect for private and family life

• See for example: McGowan v Scottish Water, E.A.T.

• employee believed to be falsifying timesheets

• employer’s surveillance of him was capable of infringing his private life

• but was proportionate

• Employers moving to “output based” model

Note on Competition Law

Competition Law, also known as anti-trust law in the USA, is law that promotes or maintains market competition by regulating anti-competitive conduct by companies. Reference used in Wikipedia)

This definition needs to be expanded to include

• National and county laws that promote or restrict competitive advantage and barriers in favor of local market interests, also known as protectionism. These matters are affected by jurisdiction and precedence of law over other laws. Examples of this include Patriot Act vs Safe harbor.

• Sovereignty protection making necessary protections of strategic resources and defense of national interests

• Market competition relating to public/federal and private sector policies which are driven by different stakeholder and investor priorities, notably,

• Specific employment law regulations pertaining to actions relating to market development and

Comments on Anti-Competitive practices

• Agreements and contract restrictive practices

• Preventing open trading and competition

• Cartels

• Copyright ownership of technology standards

• Preventing common standards that support open communication and free trade from being controlled and monetized

• Patent Ownership of technology standards

• Use of patents to defend market differentiation

• Use of patents to prevent free innovation and development of products and services t markets

• Monopolistic control of market demand pricing through supply dominance

• Control of channel / gateway access to product/service delivery through proprietary standards

• Restricted practices in allowance of hosting products and services in 3rd party catalogs and hosted cloud / managed hosting environments

• Use of off shore model to prevent on-shore market control through avoidance of local government rules enabling avoidance of mandates to enforce fair dealing

• Restrictive licensing practices with excessive long periods of application, high termination costs

• Price fixing, excessive margin take of transaction; price tying; price gouging; predatory pricing of proprietary services due to lock in and high switching barriers e.g. Desk top software client license fees

• Lower cost domination through capacity investment domination

• M&A activity creating asymmetric in competitive practices and consumer choice

• Creation of market domination through M&A growth

• Supply chain control

• Use of network providers to manage service delivery openness

• Restricted practices in closed hosting and network management practices restricting use of channels, gateway proxies, IPs and APIs

• Governmental taxation of online and offline services

• Example, Californian state Sales tax vs Amazon

• Government censorship

• Control of Internet access of external

• E.g. Chinese government vs google

• Legislative burden

• Rise in employment law controls

• Rise in certification and government legislative affecting sourcing and competition

World Economic Forum May 2010 report on Cloud Computing

Economic implications of diffusion of cloud computing

http://www3.weforum.org/docs/WEF_ITTC_FutureCloudComputing_Report_2010.pdf

https://members.weforum.org/pdf/GITR10/Part1/Chap%209_Economic%20Consequences%20of%20the%20Diffusion%20of%20Cloud%20Computing.pdf

The following diagrams from the report illustrate the Cloud Computing Pattern

Generic Cloud Computing Architecture Pattern

This patter is for illustration only to highlight the key architectural points

Abstractions

• Channel to business multi-connectivity potential

• Multi-device connective potential

• Portability capabilities

• Data Portability

• Application Portability

• Platform Portability

• Interoperability capabilities

• Application Interoperability

• Platform interoperability

• Infrastructure interoperability

• Environment interoperability

• Data portability potential – identity by proxy

• Access to low cost - massive and flexible storage and compute resources

• Vertical Industry resources on-demand

• Shared “hub” service consolidate – creation of cyber marketplaces

Why does cloud computing present a perfect storm for competition ?

(Reference Example: McKinsey report State of Global Banking Sector – In search of a sustainably model September 2011, Ref pg 22-23 on impact of on-line consumer behavior activity . http://www.mckinsey.com/clientservice/Financial_Services/Knowledge_Highlights/Recent_Reports/~/media/Reports/Financial_Services/McKGlobalBanking.ashx)

• Monopolistic first mover advantage + WWW network reach (in your back yard)

• Why: because many public clouds have proprietary channel/gateway practices (even when the say and have hosted environments are “open” technology containers and API standards. In short, they control the access to their resources. i.e. They are not open “utility” type channels controlled by a regulator aka energy industry

• Hosting rules for countries can be either an advantage or restrictive from different perspectives

• Cross industry substitution threat

• Cloud computing enables non-industry competitors to enter the market and compete for customers. Why: Cloud lowers entry barriers:

• The online store catalog can be made available to customers via URL

• The backoffice capacity to host the service can be a 3rd party low cost cloud hoster – avoid capex investment

• Example: Banking services – from Tesco Retail sector

• Example: Residential Law – from on-line providers

• Startup barrier size issues

• While many small companies can benefit as users of cloud, being a cloud provider or vendor is less easy

• Why: investment in cloud management requires incremental returns that may be difficult to sustain without clear business revenue monetization model.

• Migration of legacy technology to cloud may be cost inefficient due to integration and hosting costs

• But some VPN cloud switch hosting enables this to be an alternative

• But again this is a knowledge and ownership barrier to this technology.

• Work around is through proxie cloud services to host own cloud service (but this does not get round the issue to original cloud provider model entry

• Freemium: Open Source Cloud + Advertizing monetizing models

• Open source availability enabling “free” cloud service access to many users

• Why: Monetization methods not based on ownership but on volume usage

• Can undermine commerce traditional business models creating potential market erosion

• Creation of open source license lockout issues

• Adoption demographics + smart mobility + information leakage

• Growing new generation using online services creating mind shift to new online change but more importantly also the creation of cyber communities

• Why: creation of new class of online resource and commodity categories that are interchangeable with “high street” physical brands and presence

• Challenges: adoption rates slower due to mind shift and risk impediments. But this is shifting as access and service becomes industrialized

• Security, compliance and risk assertion vs price/cost available trade-off lowering jump point to cloud

• Why: lowering break even criteria and risk profile

• Growth of compliancy and security management vs cost of compliance and maintenance support cost pressures

• Elasticity scaling + cash-flow model enabling flexible growth potential

• Large differential in low cost ownership

• Development of Opex cash flow mind shift and service use

• Need improved start-up industry and mature industry migration strategies

• New business creation

• Cloud enables new on-line markets and products/services to be considered as implementations of cloud enabled services

• Why: it’s a convergence of internet, mobility, cloud utility resources and on-demand administration tools (Billing metering and catalog)

• Example1: Cloud hosters provide: website building tools for users

• Example2: Cloud hosters provide catalog publishing services and account management to clients to post their application and service line: e.g. Amazon FPS, Paypal ad Google checkout; Apple App store

• This is the emerge of Cloud Management Services CMS

• Innovation beyond the 4 walls and a country creating knowledge lockin , lockout

• Cloud enables access to crowd models

• Crowd sourcing

• Crowd funding

• Crowd financing

• Why: the low entry barriers to collaborate enables idea transfer but, this shifts the ownership of the ideas to potentially the hosting management without due controls

• Semantics interoperability and portability issues

• Common process standards are remaining difficult to standardize

• Why: cultural and language barriers make homogenous business services difficult to automate

• Integration of semantic systems remains difficult

• This challenge create market lockin and lockout as cloud becomes semantic domain managed.

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