Transparency sought in the Cloud storage market

The Competition & Markets Authority (CMA) is to investigate whether consumers are being unfairly charged for their cloud storage services.  The regulator’s focus is mainly on:

• Unexpected price increases after a contract has been taken out
• Changes or reductions to unlimited storage capacity deals
• Consumers’ data being lost or deleted
• How contracts are automatically renewed at the end of the period
• What happens to consumers’ data when they cancel a contract

With a far wider range of devices now providing storage services (laptops, mobiles and tablets) with demand access from anywhere in the world, it is of little surprise to hear from the Office of National Statistics (ONS), that 40% of UK adults now reportedly use some form of Cloud storage.

The price of Cloud storage is flattening to near zero levels, so many storage providers are offering interesting deals to lure internet users in off the back of tie-ins to more lucrative profit margin services (ie. Amazon Prime and Amazon Web Services).  However, often it’s the small print that trips end users up, because unlike enterprise storage, it doesn’t have to be smart or require management.  These inflated costs to change use volumes or content type can prompt significant excess costs (ie. a user seeks to store videos versus just photos or documents).  The initial free memory included in the bundle, pales into insignificance when top up charges of up to £40 per month for needed extra gigabytes are incurred.

The investigation may result in enforcement action using consumer protection laws, as well as the regulators seeking voluntary change within the sector and guidance to business.  With the new Consumer Rights Act having taken effect in October 2015, price transparency has been tightened, so expect changes in the market to follow.

The question is whether this consumer experience could manifest itself in the higher margined enterprise zone in the future potentially as behaviours do tend to follow in markets?   When a deal sounds too good to be true, it often is.  For MSPs, the answer will come if we start to see cloud providers offering bundled packages that are smart to organisations and include the necessary high performance and high availability for large amounts of data, but at more transparent, reasonable prices.

Cloud 10@300




Author: Lindsay Burden

Marketing manager, copywriter and editorial manager of Amicus ITS blog output.

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