Innovation Policy for Cloud-Computing Contracts
Handbook of Research on Digital Transformations (Francisco-Xavier Olleros & Majlinda Zhegu eds., 2016)
34 Pages Posted: 8 Dec 2014 Last revised: 23 Apr 2017
Date Written: December 5, 2014
Like any truly disruptive technological leap that alters real-space behavior, the shift to cloud computing carries with it implications for the design and implementation of legal systems. This paper explores, with a focus on choice of law and contract law, how legal institutions can facilitate the diffusion of cloud services. It proceeds in three parts. First, it relates the results of a new survey of cloud service contracts. The survey shows that choice-of-law provisions in cloud contracts have become ubiquitous, overwhelmingly favor U.S. over non-U.S. jurisdictions, and heavily favor California over other U.S. states. Second, the paper offers normative suggestions, based on analogous Internet-related jurisprudence, for how choice-of-law analyses should proceed in the cloud context. Third, the paper analyzes the future of the cloud. Two alternative paths present themselves: (1) the cloud may continue to be delivered by a thick core of large providers, or (2) by leveraging blockchain technology, the cloud may shift to a distributed model. This decentralized cloud would likely rely heavily on smart contracts — replacing choice of law with “choice of code” and (via self-enforcement mechanisms) rendering much of traditional contract law obsolete. The paper concludes by suggesting extralegal systems to address the gaps left by this obsolescence.
Keywords: cloud computing, cloud contracts, choice of law, smart contracts, Cloud 2.0, blockchain, Ethereum, ADEPT, Bitcoin
JEL Classification: O33, O14
Suggested Citation: Suggested Citation