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UK regulator extracts fairer cloud-storage terms from Dropbox

2016

LowStatus: ResolvedYear: 2016

After a review of the cloud-storage sector, the UK's Competition and Markets Authority secured voluntary commitments from providers including Dropbox in 2016 to improve unfair contract terms — covering notice of price and service changes, cancellation and refunds, and auto-renewal transparency.

What happened

On 4 November 2016 the UK Competition and Markets Authority (CMA) announced that it had concluded a review of the consumer cloud-storage sector, securing voluntary undertakings from providers including BT, Dropbox, Google, and Mozy — named directly in the CMA's release — alongside other providers such as JustCloud and Livedrive, as part of commitments the regulator said covered seven companies in total. The undertakings were designed to bring providers' contract terms and practices into line with UK consumer-protection law.

The CMA's undertakings addressed four specific practices. Providers committed to "guaranteeing adequate notice is given before any significant adverse changes are made to the price, service or contract"; to "ensuring customers are given clearer information about how they can cancel if they don't want to accept proposed changes, and when and how they can get refunds"; to "limiting the circumstances in which companies can suspend or cancel the service"; and to "increasing transparency and giving notice before companies automatically renew fixed-term contracts."

Nisha Arora, the CMA's Senior Director for Consumer Enforcement, said: "People increasingly rely on cloud storage as a safe and convenient place to keep family photos, music and important documents, so it is vital that they are treated fairly and are not hit by unexpected changes to price or storage levels." The CMA's release also noted that approximately three in ten British adults personally use cloud storage. The CMA framed the outcome as securing 'better deals' for cloud-storage customers; it was a consumer-protection intervention rather than a competition (antitrust) enforcement action, and no penalty was imposed on Dropbox.

Dropbox's participation was as one of several named providers that gave undertakings; the changes were intended to benefit UK consumers using its storage service.

Impact

The CMA's action is an early, documented instance of a regulator pressing Dropbox to make its consumer contract terms fairer, and it foreshadowed the recurring scrutiny of Dropbox's cancellation, auto-renewal, and service-change practices in other jurisdictions — including the later Italian AGCM proceedings and the U.S. California auto-renewal matters. It reflects a broader regulatory skepticism toward the standard terms of consumer cloud services.

Dropbox's Response / Official Position

Dropbox was among the providers that gave voluntary undertakings to the CMA to amend their terms; it did not face a penalty. The reforms were implemented as part of the sector-wide commitments.

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