Why small businesses should care about the Megaupload debacle

The site's uncertain fate serves as a reminder that SMBs should carefully consider the viability of cloud storage and backup services they use -- or they could lose important company data.

Anyone who has a passing interest in technology issues probably has been reading about Megaupload, the file-sharing company that was targeted by the U.S. Justice Department and shut down amid accusations of data piracy. As of this writing, four of the executives behind the site have been arrested on charges ranging from racketeering to criminal copyright infringement.

It would be easy to read this story with just a passing interest in the intrigue of the matter, but there are two reasons that small businesses should follow this carefully.

  1. Legitimate users of the Megaupload site (there were an estimated 50 million people uploading to the site) stand to lose their data in the debacle. That's because right now, access is frozen. So, if you were a company or individual uploading personal documents or photos to which you legitimately owned the copyright, you are being shut out while the litigation proceeds. If you didn't have a backup, you might be seriously out of lock.
  2. Even the hosting companies might not have access if a cloud storage or service company goes belly-up. That's because of security and management processes that were put in place between the site owners and the hosting companies. This makes me recall the time my friend was running a small e-commerce site. When the hosting site went under, he lost all access to the files until he could negotiate a rather arduous process to get them back. It was a different situation, with a similar result.

For me, the Megaupload mess is a reminder that SMBs -- indeed companies of any size -- need to do a much better job of reviewing the terms of cloud services that they are using. Seriously, have you stopped to consider what would happen if Dropbox dropped off the face of the earth tomorrow? Have you bothered to ask what would happen to your files?

Small businesses need start asking questions that help them understand the data backup plan behind their chosen cloud providers: how often is the data replicated and secured? They also need to understand the recovery strategy: how quickly will you get data back is a server goes south? Not to mention, they need to understand what would happen legally if the provider simply ran out of money or ran into legal problems akin to Megaupload.

Is your small business asking the right questions?

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