Opinions and Legal Insights

Italian Competition Agency Investigates Major Cloud Computing Service Providers for Allegedly Unfair T&Cs

The Italian Competition Authority (AGCM) has recently launched investigations against global leading providers of cloud computing services. AGCM is concerned that the service providers’ terms & conditions violate Italian consumers’ protection rules.

In particular, AGCM alleges that the investigated providers are engaging in unfair business practices consisting of:

  • improper collection of user data for commercial purposes;
  • undue influence on consumers, whose consent to the collection and use of their personal data for commercial purposes is required in order to use the cloud storage service; and
  • failure to clearly provide consumers with information on their right to withdraw from the contract and/or to access alternative dispute resolution mechanisms.

AGCM also alleges that some of the clauses contained in the general terms & conditions of these leading providers of cloud computing services are unfair.

Specifically, according to AGCM, allegedly unfair terms include the following:

  • the provider’s right to unilaterally modify contractual conditions, without notice or right to terminate or switch provider;
  • the provider’s right to suspend and interrupt the services, without minimum contract term;
  • the provider’s exemption or limitation of liability for security breaches, even in cases of damages or loss of documents stored on the user’s cloud space; and
  • the prevalence of the English version of the terms & conditions over the Italian version.

AGCM alleges that these types of clauses may be presumed to be in violation of the Italian Consumer Code, as they cause a significant imbalance in consumer’s rights and obligations and they appear to be drafted in a way that is unclear for the average consumer.

Interestingly, this approach seems to echo enhanced sector-specific consumer-protection provisions contained in the new EU Electronic Communications Code, to be transposed into national law across the EU by December 2020.

While the outcome of these investigations remains to be seen, they mark a growing enforcement trend not only in Italy, but also in other jurisdictions, to protect consumers and to address perceived risk of “market tipping” in favour of global digital platforms. For more information on this trend, see our thematic page on Global Digital Markets Regulation.

Cloud service providers, and more generally digital markets players, with activities in Italy and with similar clauses in the terms of use of their services should seek legal advice on the potential risks and how to mitigate them.

 

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