The file upload/hosting business was dealt a crushing blow when the U.S. Justice Department shut Megaupload's servers in Hong Kong in January and had founder Kim Dotcom arrested in New Zealand. The Megaupload team had created an entire ecosystem facilitating the violation of U.S. copyright laws, but the technological heart of the operation hinged around a user's ability to upload copyrighted material, retrieve an URL that pointed directly to that material, and then distribute (or sell) that URL to anyone.
As of today, SkyDrive, Google Drive, Dropbox, Box, and SugarSync have the same feature: They make it very easy to upload a file and generate an URL that points to that file alone. Uploader can then send the URL to anyone they wish, in some cases with an optional password, and the recipients can download the file without signing up for an account, without logging in. SpiderOak has a similar capability, called ShareRooms, that works with folders.
If Megaupload's transgressions were so egregious they warranted international police action, what standards apply to these other cloud storage companies? There's hardly a hair's breadth of distance between cloud storage and file sharing. Will Microsoft, Google, Dropbox, Box, SugarSync, and SpiderOak be required to scan incoming files for copyright violations? Will they have to implement a Content ID system, similar to YouTube's? If so, Google -- which invented Content ID -- has a big leg up on its competitors.
In the end, it seems to me that the battle for online storage will be less about features and more about trust. Google's raised a hornet's nest of privacy conerns this week over its ridiculous Google Drive terms of service, then compounded the damage by not immediately responding, "We screwed up, we'll change it." Dropbox blew it last year with privacy concerns that haven't been solved -- at least, not in a technical way.
Of all the data storage companies I've mentioned here, only SpiderOak says that it can't look at your stored data. They don't keep the keys. All of the others have ways -- carefully controlled, logged, audited ways -- of looking at your data.
So whom do you trust? Or do you encrypt your data before sending it to the cloud?
The primary collateral damage in this latest onslaught? Trust.
I see lots of articles online debating picayune features in the data storage apps. Fair enough. None of them seem to state clearly that when you put your data in the cloud, employees of the company trusted with your data can look at it. Specific employees, yes, and there are systems to prevent abuses, yes. But it can still be done.
People who instinctively distrust online storage have good reasons for doing so. People who don't understand how their cloud data can be compromised may be in for a rude awakening.
This story, "Cloud storage booming, but trouble brewing" was originally published at InfoWorld.com. Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow InfoWorld.com on Twitter.