Cloud Computing which entered our lives in the beginning of 2000s through online platforms like MSN and gmail, has marked an era in technology and set a new course for software industry. In particular, IT departments of companies are watching Cloud Computing and its innovations with great interest.

Companies with subsidiaries, different branches and several offices reduce their hardware and software costs and have agile technology structure via cloud services. Enterprises which purchase user based cloud services instead of separate software licenses for each installation/hardware, are said to reduce their long-term technology investment costs.

It is hard to say that Cloud Computing, influencing both entities and real persons technologically, has the same impact in Turkish legal area. Currently, there is no security standard for cloud services, no regulation for data protection rules or exemplary court decisions. Cloud agreements, which do not fall in standard agreement types defined in Turkish Code of Obligations and actually consist of different elements like service/software license, should be interpreted correctly in terms of applicable legislation including Law on Intellectual and Artistic Works and shall cover protection clauses for companies. Otherwise, companies who would like to follow the innovative path in technology might fail in meeting their saving expectations and even face material damages. We should note here that law chases technology and usually falls behind in making required regulations for the new products and services.

Data Protection and Safety, is of vital importance for companies both in terms of their trade secrets, customers lists and personal data of their personnel. It is important to correctly evaluate where the data will be stored (software company or hosting company), who will have access to data, how it will be processed and what liabilities parties will have in relation to data.

Pricing models should also be chosen carefully, especially in terms of growing companies. If not, cost of cloud service may exceed the cost of traditional licensing model. The material legal/commercial issues to consider should be: proper analysis of company's growth plan, including different pricing options in the agreement and in any case having an exit clause to terminate the agreement in certain periods.

Service Level Agreements also referred to as SLAs, are seen as non-negotiable clauses of software companies but these clauses and their consequences should be cautiously evaluated. Otherwise downtime periods/errors causing service disruption might still be deemed as "service performed in accordance with agreement" and companies may end up in a position with no right to claim damages/losses.

Liability, Warranty, Flexibility to Switch to another Cloud Serviceshould also be regulated in accordance with the risks of the company but also the nature of Cloud services.

When companies decide for cloud computing evolution, it is essential for their IT department and technology lawyers to carefully evaluate whether the cloud service will meet the technological needs and also provide required legal protection.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.