Cloud services to consumers are often made available free of charge provided the consumer signs up for the cloud provider’s standard terms of contract. What effect does getting a free cloud service have on the enforceability of these terms against consumers in the EU?
The European Union’s legislation with respect to consumer rights is very strict and protective in comparison with, for example, the US legislation. The definition of the scope of applicable directives and their national implementations is defined broadly and they override any standard contractual term conflicting with them and their principles. Without looking into national laws, we may declare on the basis of the Consumer Rights Directive 2011/83/EU (CRD), Unfair Terms in Consumer Contracts Directive 93/13/EEC (UTCC) and the Unfair Commercial Practices Directive 2005/29/EC that any cloud service targeting EU consumers, who are typically contracting with cloud service providers via non-negotiable standard agreements, is unlikely to be able to enforce its right based on the standard contractual term that contradicts to these directives and their equivalent national laws.
The definition of the consumer under EU legislation includes any natural person, who enters into a contractual relationship covered by the directive outside of its trade, business or profession. Even though, the CRD’s definitions refer to contracts that are to be paid for, and the Article 4 allows for the Member States to exclude from protection contracts which contractual value is below a certain threshold, it does not mean that natural persons as cloud service users within the EU are excluded from consumer protection when they become a party to a non-negotiable standard contract free of monetary charges. Unless, the given EU Member State did not introduce such exclusion, the consumer protection shall be applicable to ‘click through’ standard contracts and terms of services used for free cloud services.
Furthermore, consumers that use free of charge cloud services should not be and are not left without legal protection in an unbalanced contractual relationship, since in most of these free of charge services it is the user (consumer) itself and its data that is the true counter value of the service. The consideration for using ‘free’ cloud services is the user’s activity/use of the given cloud service, which with respect to such user crowed accumulates to a very valuable contribution to the cloud provider’s service. The UTCC’s Article 3 declares that ‘a contractual term which has not been individually negotiated shall be regarded as unfair if, contrary to the requirement of good faith, it causes a significant imbalance in the parties’ rights and obligations arising under the contract, to the detriment of the consumer.’ Therefore, any standard contractual term that is deemed unreasonable or unfair in accordance with the relevant EU legislation will be unenforceable irrespective of the consideration. For example, Google as major cloud service providers who offers Gmail as a free cloud services to EU consumers will not be able to enforce standard contractual terms e.g. regarding choice of governing law and jurisdiction, unless it is defined by the domicile of the EU consumer.