Navigating the legal frontier: Exploring the risks of edge computing

13 June 2023
by Ridwaan Boda and Shaaista Tayob

In today’s world of digital transformation, where data-driven decisions and operating in real-time have become paramount for a business to stay relevant, edge computing has emerged as a technological game changer. While offering many benefits, it does, however, come with legal risks.

Unlike cloud computing, edge computing takes a decentralised approach to data processing. It involves bringing computation and data storage closer to the source of data generation. Simply put, edge computing means running fewer processes in the cloud and moving those processes to local places, such as on a user’s computer, or an edge server.

Data protection and security

One major concern about edge computing is data protection and security, as personal information processed and stored on distributed devices at the network’s edge may be more vulnerable to unauthorised access or breaches.

Organisations using edge computing must implement appropriate security measures as required by the Protection of Personal Information Act, 2013 (“POPIA”). Additionally, cross-border data transfers in edge computing can trigger compliance requirements under POPIA, including obtaining explicit consent and ensuring adequate data protection in recipient countries.

Obtaining valid consent and adhering to purpose limitation can become challenging due to the distributed nature of edge computing. Organisations must define clear roles and responsibilities, ensuring accountability and compliance with the obligations set out in POPIA.

In addition, organisations must establish processes to enable individuals to exercise their data subject rights effectively within the framework of edge computing.

Intellectual property (“IP”) protection

Edge computing often involves the transfer and processing of IP, such as proprietary algorithms or trade secrets, to edge devices or edge data centres. Organisations must take appropriate measures to protect their IP rights and ensure that unauthorised access or use of IP is prevented. Furthermore, if IP is to be externalised outside of South Africa, this may trigger exchange control permission requirements.

Contractual risks

When deploying edge computing solutions, organisations often engage with various stakeholders, including device manufacturers, service providers, and network operators. Establishing clear contractual agreements that outline data ownership, liability, security responsibilities, and compliance obligations is crucial to effectively managing legal risks.

A well drafted contract strategy, which includes upfront risk assessments, standard templates, a playbook for staff to assist in fast tracking negotiations, as well as training, should be part of any edge computing project.

Liability and accountability

Determining liability can be complex in edge computing environments where data processing occurs at multiple levels, involving different entities and devices.

To avoid potential legal disputes, data breaches, or service failures, a clear allocation of responsibilities and accountability should be defined. Agreements need to include robust protections to guard against unfavourable liability positions and undue risk assumption.

Regulatory compliance

Industries that handle sensitive data, such as healthcare, finance, or telecommunications, must ensure that edge computing deployments comply with industry-specific regulations and standards, which is crucial to avoiding legal consequences. This may necessitate adherence to a number of regulatory requirements for regulated industries, such as the banking or insurance industry, in South Africa.

While edge computing offers immense opportunities for innovation and efficiency, it also introduces significant legal risks that should not be overlooked. Addressing these risks requires a holistic approach that combines legal expertise, technological advancements, and collaborative efforts. By navigating the legal challenges associated with edge computing, we can unlock the full potential of this transformative technology while upholding privacy, security, and compliance in the digital age.

Should your company need guidance in navigating these challenges, reach out to our expert TMT lawyers for assistance.

Ridwaan Boda
Technology, Media and Telecommunications | Executive

Shaaista Tayob
Technology, Media and Telecommunications | Associate