The cloud storage industry is in trouble with a serious regulatory investigation raised from complaints about price rises and storage capacity reductions.
Recently, this investigation is implemented into whether internet users are being charged unfairly when they use cloud storage services.
The Competition and Markets Authority (CMA) said it had opened a review on the sector, which provide digital data storage space for things like personal files, music, videos and photos in return for a fee. It is reported that some providers may be breaching consumer laws.
The regulatory scrutiny originated from the complaints that prices go up after a customer has taken out a contract - or that the amount of data storage can be changed. Therefore, the Competition and Markets Authority determine to define whether consumers are getting a fair deal from digital file storage services.
Users of lap-tops, mobiles and tablets are increasingly taking advantage of such services, to store photos, documents, TV programmes and films. By storing such files in the cloud, rather than on the device itself, users get more memory, and enable to access them from anywhere in the world.
It is believed that 40% of UK adults use such services - to free up memory space on a device such as a laptop or smartphone. Usually cloud storage providers offer a certain amount of memory for free, but can charge up to £40 a month for extra gigabytes.
Amongst the biggest providers are Dropbox, Google Drive and Apple's iCloud. Companies now offer such services - with providers varying from well-known major tech firms to small independents.
The CMA said it had received reports about consumers "being surprised by significant price increases and by reductions to unlimited storage capacity deals after contracts have been agreed".
The watchdog committee also informed that it would examine concerns about the loss or deletion of some consumers’ data as part of its effort to determine whether the law had been broken or further action was warranted.
Senior director within its consumer division, Nisha Arora, said: "Cloud storage is a dynamic and growing sector which is already highly valued by consumers.
The investigation will collect data to find out how contracts are automatically renewed at the end of the period. It also detects what happens to consumers' data when they cancel a contract
"We want to hear from business, interested organizations and consumers about their experiences, to assess whether companies understand and comply with consumer law and whether cloud storage services are working well for consumers as a result.
If any breaches of consumer protection laws are detected, CMA promises to take further tough action to address these, which they consider could include “enforcement action using our consumer law powers, seeking voluntary change from the sector or providing guidance to business or consumers.”
The law on price transparency has been tightened since the Consumer Rights Act came into force on 1 October. The CMA's consultation on the issue will be open with an initial report on its findings expected in May. According to CMA, interested parties had until 15 January to respond to the review.
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