GDPR compliance is not one of these topics that someone reads for fun, yet it is necessary to understand it. The General Data Protection Regulation has changed the digital world in the EU and the whole world. It has introduced stricter rules about personal data handling, storage, and use. So how does GDPR’s complexity affect cloud hosting? Here we will explore the connection and what you should consider when you are choosing a cloud provider for your European users.
So, what is GDPR?
GDPR is short of the General Data Protection Regulation. It is a European Union law, that entered into force in 2018 to protect the data privacy rights of EU citizens. The law sets strict rules on how each business collects, stores, and uses the personal data of European users.
Read more about GDPR in the site of the European Commission.
Key GDPR requirements for businesses
- Lawful processing. Each company must have a legal basis for collecting and processing the data of the users. This means that the users must have consented, and signed a contract, there should be a legitimate interest or the law requires it.
- Data processing agreements (DPAs) with third parties. If one company works with cloud providers, payment gateways, or any other third party service that handles users’ data, this company needs a Data Processing Agreement (DPA) to comply. In this document, the company outlines how the information is processed, the security measures, and who is responsible for what.
- Transparency and users’ rights. The business should explain what information is collected, why, and how it will be used. The user should be able to access it, edit it, delete it, or transfer it to another service.
- Data minimization. Each company can collect only necessary data, and should not be stored for a longer period that the company needs it. If the information is no longer needed, it should be deleted.
- Data security and protection. All information should be protected from data breaches and hackers. Companies should encrypt the data, have strict access control, and should perform regular security audits.
- Breach notification. If any breach of information occurs that is related to users’ data, the company should notify the authorities, and the affected users within 72 hours of becoming aware.
- International data transfer. This is important for all companies that transfer data of European customers to servers in the US or another outside of the EU country. Such a company needs Standard Contractual Clauses (SCCs), Binding Corporate Rules (BCRs), and other security mechanisms for the transfer.
How does it affect your company, if your business is located outside of the European Union?
The law affects any company worldwide that has customers from the EU. It doesn’t matter if you have an American, Indian, Mexican, or any other company, if you sell products or offer services to Europeans, you should comply with GDPR.
If you collect emails, names, phone numbers, and personal information in the EU through your site, application, or SaaS, you should make sure the following:
- Get clear consent before collecting data.
- Allow users to access, edit, and delete the data.
- Keep the collected information secured.
- In case of a data breach, notify within 72 hours.
- What happens if you don’t comply with GDPR?
Failing to comply leads to fines of up to €20,000,000, or up to 4% of the company’s global turnover of the past fiscal year – whichever is higher. As you can see, the potential damage to your business is massive, so you should comply with the law, or stop offering your products and services to Europeans. Whichever suits you better.
How does GDPR affect cloud hosting?
GDPR obligates businesses to use cloud service providers (CSP) that are also compliant. The business is classified as a “data controller”, and all the cloud service providers (hosting, payment processors, applications, etc.) are classified as “data processors”. They operate based on the so-called shared responsibility model. That means that both parties have obligations.
Shared Responsibility Model
| Responsibility | Business (Controller) | Cloud Service Provider (Processor) |
| Data security | It should implement access controls, secured storage, and encryption. | It should ensure infrastructure security (firewalls, encryption, access control, etc.). |
| Compliance certification | Need to check the CSP certifications and compliance status. | The processor ensures that the cloud environment reaches the industry standards and proves it with certifications (e.g., ISO 27001, SOC 2, GDPR compliance frameworks). |
| Data processing and storage | It defines how the information should be collected, used, and processed within its infrastructure. | The provider stores and processes data, based on the agreement with each customer. |
| Data subject rights (access, rectification, erasure, portability) | Handles the requests from the users for data access, modification, and erasure in accordance with GDPR. | The supplier should provides ways that the controller can use to manage data access, modification, and erasure. |
| Data encryption | Configures and manages encryption settings. | It should ensures encryption of the data during transfers and during storage (rest). |
| Breach response | Within 72 hours the business should notify the authorities and the affected users. | It should detect security breaches and notify its customers. |
| Geographic Data Location | Think carefully and select hosting regions in compliance with data localization requirements. | It should have options for EU-based data centers and ensure compliance. |
| Data Processing Agreements (DPA) | Sign DPAs with every service provider and regularly audit them. | It should provides standard DPAs to comply with the law. |
Choosing a GDPR-compliant cloud provider
What to look for in a provider of cloud service?
- Strong data encryption. The data should be encrypted with the latest technology during transit and storage (rest).
- Access control features. Typical measures that cloud providers offer are role-based access controls. Using it, you can have different groups of users with different levels of access to resources. Another common tool is multi-factor authentication (MFA) which requires more than one factor (password, USB key, photo, etc.) to log in. A new method is the use of passkeys. We already answered many questions about passkeys, so you can check this article, too.
- GDPR certification. The provider should have the required certifications like ISO 27001 and should adhere to the GDPR-compliant frameworks.
- Data sovereignty options. The provider should be able to store the data in EU-based servers like Sofia Data Center for example, or comply with international data transfer rules.
Our company Neterra is fully compliant with GDPR, so we can ensure all the above and even more. We offer excellent cloud services for companies from all around the globe.
Pay attention to the Data Processing Agreements (DPAs)
A Data Processing Agreement (DPA) is a contract between the business and the service provider, that is legally required and should establish the following:
- How data is processed, stored, and protected.
- Which part is responsible for what and how to comply.
- Establish a process to handle data breaches if one occurs.
The European Union can potentially put penalties on businesses that lack such DPAs.
Best practices for GDPR compliance in cloud hosting
1. Strong security
Ensure strong access controls by implementing different access levels to sensitive data. Make sure that all of the data is encrypted, during rest and transfer, using modern encryption methods.
2. Perform regular security audits and risk assessments
The provider should perform regular security audits to identify on time, each vulnerability and fix the problems on time to be compliant with GDPR.
3. Ensure data subject rights
The provider should offer mechanisms to users, that can grant them access, and the possibility to modify, delete, and transfer their data.
4. Establish a protocol in case of breaches
The business needs to have an action plan in case such a problem occurs. It needs to know how to report within 72 hours.
Common GDPR compliance mistakes to avoid
- Don’t assume that the cloud provider handles everything. Many businesses think that all the responsibility for compliance belongs to the cloud provider. That is not true. The companies must comply by protecting the data, creating policies, and taking care of the users’ rights.
- Lack of any Data Processing Agreements. It is incredibly common that businesses do not create special DPA with the service providers. In many cases, this action can violate GDPR regulations and can lead to fines. If you don’t want to make a mistake, sign DPAs with your providers.
- Poor management of data. Some companies don’t pay attention to where the data is stored, who has access to it, and how third parties are using it. This can easily lead to compliance gaps and problems.
Conclusion
Clearly, businesses need to take a more proactive approach and should not think that the cloud providers take all the responsibilities for GDPR compliance. While choosing a good service provider is in the hands of the companies, we should all remember that it is a matter of joint responsibility.
Key takeaways:
- Make sure that you select a GDPR-compliant cloud provider like Neterra, which has strong security measures.
- Implement access control, strong encryption, and good data management practices.
- Regularly audit the security measures and the Data Processing Agreements (DPAs). If it is needed, take action and improve your security protocols.
- Have an action plan in case of a data breach. As Ted Schlein, the CEO of Ballistic Ventures says: “There are only two types of companies in the world. Those that have been breached and know it and those, that have been breached and don’t know it”.
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