The Impact of Client-Side Security Restrictions on the Competition of Cloud Computing Services

Yipeng Liu, Xia Sheng, and Sean R. Marston
International Journal of Electronic Commerce,
Volume 19, Number 3, Spring 2015, pp. 90-117.


The providers of cloud computing services have to ensure that the service applications, cloud software, and the physical location of the cloud are secure. Furthermore, these providers need to ensure that the service is secure on the client’s side of the system. While the prior research generally examines the internal-facing (firm-side) information technology (IT) security, this article examines the external-facing (client-side) security of a cloud computing service. To examine the client-side security level we build economic models that consider the trade-offs between system usability and client-side security restrictions. Our mixed market model is based on firms with different objectives (i.e., brand building vs. profit maximizing), while the pure market model is based on firms aiming at maximizing profits. Under the mixed market model, our results indicate that it is in the best interest of each firm to be the first mover. When the brand building firm is the first mover, the client-side security restrictions are higher for both firms. In a mixed market, managers of each firm should ensure that they differentiate their client-side security from that of their competitors. In the pure market model, the client-side security depends on the value the users place on security and usability. If users significantly value usability over security then managers should maximize the differentiation in client-side security restriction. However, as users begin to value security more, the manager of the firm with the lower security restriction level should raise client-side security restrictions until the level is the equivalent of their competitors.

Key Words and Phrases: Cloud computing, cloud computing security, client-side security, IT security, mixed market competition, pure market competition, brand building, profit maximizing.