CIOs the world over who do business with US organisations do so under the shadow of the US Patriot Act.
It has proven a thorn in the side of globalisation; this month members of the European Parliament demanded to know what lawmakers intend to do about the conflict between the European Union's Data Protection Directive and the Patriot Act. The calls come after Microsoft admitted it may be forced to hand over European customers' data on its Cloud service to US authorities and may also be compelled by the Patriot Act to keep details of any such data transfer secret.
Microsoft is hardly alone in this regard. As a US company, Amazon Web Services (AWS) is subject to the US Patriot Act and the data it manages may be accessed by the US government regardless of where it is stored around the world.
What's a CIO to do? The answer, according to AWS chief technology officer, Werner Vogels, is to encrypt private data for transit to the Cloud - and to employ best practice when it comes to classifying data.
"We take privacy very seriously," Vogels told CIO Australia. "For any subpoena we receive, we notify customers, effectively giving them the ability to seek an injunction."
Amazon uses the US Safe Harbor provisions to notify customers. The risk for CIOs, however, occurs when Cloud providers are bound to keep details of data transfers secret. By encrypting data where privacy is an issue, Vogels said, CIOs can regain a measure of control.
"The whole thing is moot if the data is encrypted," he said. "Then they [the CIO] can interact with the enforcement agency.
"We need to obey the laws in the countries we operate in but at the same time we value the privacy of our customers."
Vogels said that while most governments have an obligation to protect their citizens, they also have a duty that any regulations they put in place do not inhibit innovation.
"There is a careful balance to ensure they're not inhibiting business creation at the same time, that regulations don't adversely affect the competitive advantage that Cloud brings," he said.
"A coffee shop, ramen and a laptop - these days that's all you need to start a company."
CIOs are increasingly using Cloud services such as AWS to help enterprise IT strategies, be that moving old hardware off the books, or helping to manage risks in mergers and acquisitions.
"It's not so much about efficiency, it's about looking at security," Vogels said.
Cloud computing is also being used for business continuity planning, making use of functions such as geographic replication and fine-grain disaster recovery.
"We used to have one style of business continuity for the whole company – it was the only way to be cost effective. And, at best, it was updated once a year and the CIO had hardly any chance to test it.
Certainly, CIOs are using Cloud technology to innovate and move business units faster to market.
"As long as CIOs' only task was to cut costs, they would never become a strategic player. The Cloud really turns this around," Vogels said. "And, in most cases, the business units are not concerned about Amazon Web Services; they're concerned with what runs on top of that."
The trick is to ensure the baby isn't thrown out with the bathwater. Researchers in Germany, for example, recently found abundant security problems within Amazon's Cloud-computing services due to its customers either ignoring or forgetting published security tips.
The researches from Technische Universität Darmstadt said the ease of use of Amazon's service results in people creating virtual machines without following the detailed security guidelines.
Georgina Swan is editor of CIO Australia. Follow her on Twitter: @swandives
Follow CIO Australia on Twitter: @CIO_Australia
This story, "Avoid Patriot Act Surprises: Encrypt Cloud Data On-premise" was originally published by CIO Australia.