Trusting Privacy in the Cloud

Abstract: Cloud computing technologies have the potential to increase innovation and economic growth on a large scale. But many users worry that data sent to the cloud can be accessed by others, to the detriment of the data owner. Consequently, they do not use cloud technologies up to its otherwise efficient level. In this paper, we design an institution that attenuates this problem. Inspired by existing certification schemes, we show that in equilibrium cloud service providers produce high accountability levels, users with a high preference for data security buy cloud services for a premium, certification agencies act honestly, and a certifier of certifiers, which we call cloud association, implements the welfare-maximizing data security standard.