Image source -

This article has been written by Divya Jangid pursuing a Diploma in Advanced Contract Drafting, Negotiation, and Dispute Resolution. This article has been edited by Zigishu Singh (Associate, Lawsikho) and Ruchika Mohapatra (Associate, Lawsikho).

This article has been published by Sneha Mahawar.

Table of Contents

Download Now


With the evolution of the internet, there is a growing need to store information. The need for storage space was urgent and in 1947 Williams-Kilburn Tube featured a fully electronic form of data storage. Nowadays data/ information on the internet is stored in data servers. Information on the internet is stored on hard drives of web servers around the world. 

The process of storing the data on servers will increase management costs, the maintenance cost of IT equipment. On the cost of management and storage equipment businesses have now turned towards cloud computing service providers. Cloud computing is the availability of computer system resources namely data storage, computing power without any need for management by the user. Here we will further analyse the scope of the computing service level agreement entered into by Amazon in particular.

As per reports, Amazon is one of the major cloud service providers followed by Microsoft Azure, Google Cloud, Alibaba Cloud, IBM Cloud, Oracle, Salesforce, SAP, Rackspace Cloud, VMWare. Amazon provides cloud services through its subsidiary Amazon Web Services and in 2018 the revenue generated by Amazon Web Services was $ 25.6 billion with $ 7.2 billion profit which grew to $ 33 billion in the year 2019.

Service Level Agreements in Cloud computing services

A service level agreement (SLA) is an agreement between a client and a cloud computing service provider. Whereas the term cloud computing is referred to a data centre wherein data is stored virtually over the internet in the hard drives of the service provider. The term Cloud computing generally denotes anything that includes delivering the hosted services on the internet to the Client. Due to the complex nature of the customer demands, companies today have adopted a service-oriented approach and quality and reliability has become important. Where the service level agreements serve as a foundation for the level of services to be delivered to the customer.

Service-based cloud computing is of generally their types:

  1. Customer-based Service Level Agreement;
  2. Service-based Service Level Agreement;
  3.  Multilevel Service Level Agreement.

Service Level Agreement details out some parameters based on which the service of service providers will be measured or examined, Key clauses in a service level agreement are as follows: 

  1. Type of service provided: this clause will elaborate on the type of service to be provided to the customer.
  2. Service availability time (known as uptime): it includes the amount of time the service will be available for use. 
  3. Latency or the response time: it refers to a quick time in which a problem, the query will be responded to a technical issue raised through a computer, mobile, or other methods.
  4. Security: It details what will happen when there is any security breach.
  5. Service component reliability: It refers to an event of probability that a system will perform correctly during a specific time.
  6. Term of the agreement: duration of the contract.
  7. Services covered: it will detail out the service covered in the agreement.
  8. Accountability of parties: parties will be accountable for their performance on the agreement.
  9. Warranties: warranties if any offered by the service provider.
  10. Damages: when the service providers are unable to match the expected service level.
  11. Report: In case of any causality how to give notice to the service provider.

And if the cloud computing service provider fails to adhere to the standards of the Service Level Agreement and fails to deliver quality work to the customers then they have to pay a penalty to compensate. So, the Service provider has to compensate the client if any causality occurs.

About Amazon Web Services

Amazon is an American multinational corporation in information technology. It focuses on e-commerce, digital streaming. Cloud computing, artificial intelligence. In 2002, Amazon brought into market Amazon web services (AWS). AWS provides internet traffic patterns, data on the popularity of websites for marketers and developers.  In 2006 grew after the launch of Elastic Compute Cloud (EC2), which rents data storage via the internet, rents computer processing power as well simple storage services(S3).  

Compute service level agreements

The Service Level Agreement covers the service of computing and storing the data. The Compute Service Level Agreement covers only the computing services. Cloud computing requires higher power to process in comparison to cloud storage. Cloud storage could be used by both businesses and individuals, but computing service is only used by big business houses.

Cloud computing services are of four types:

  1. Infrastructure as service (IaaS): Services in which hardware infrastructure is managed, maintained, and provided to the customer. It includes infrastructure which provides services such as networking, monitoring computers, storage, etc. 

For Example, Microsoft windows, with IaaS It will get access to the infrastructure needed to connect or network the physical machine in which it was installed physically.  Examples of service providers of IaaS: Windows Azure, Amazon EC2, Google compute Cloud, and Rack space, etc.

  1. Platform as Service (PaaS): It is an advanced form of IaaS. It provides a solution stack and computing platform. It provides a base to develop applications online without any data storage, serving, and management. Examples of PaaS include AWS Elastic Beanstalk, Salesforce, Google App Engine, Rackspace cloud Sites, etc.  
  2. Software as Service (SaaS): It is a special Cloud computing service including both the features of IaaS and PaaS. SaaS provides diverse businesses with tailored business models. SaaS is a Cloud computing service offering that provides software applications that are web-based. It is also known as “on-demand software”.  Generally, the SaaS is accessed by the client using web browsers. For example, Cisco Webex, Zoom, Dropbox, Google workspace, Netflix, etc.
  3. Function as Service (FaaS): It is another cloud computing service in which microservice applications are used to make it easier for cloud applications developers.  The physical hardware, web server software management, and management of virtual or physical services are provided by the Service provider.  For example, Microsoft Azure function, AWS Lambda. 

Cloud computing has become the basic necessity for the Information Technology (IT) Infrastructure.  Cloud computing services deliver computing services, such as databases, software, analytics, servers, storage. It provides economies of scale, faster innovation, and availability of resources at flexibility. 

Amazon web services is a subsidiary of Amazon founded in 2000-2005, which provides a bunch of on-demand services for cloud computing including cloud computing and APIs platforms to individuals, corporations, etc. These platforms provide IT infrastructure, distributing computing building blocks and tools. The compute services offered by Amazon Web Services are as follows:

  1. Amazon EC2;
  2. Amazon EC2 Auto Scaling;
  3. Amazon Elastic Container Registry;
  4. Amazon Elastic Container Service;
  5. Amazon Elastic Kubernetes Service;
  6. Amazon Lightsail;
  7. AWS Batch;
  8. AWS Elastic Beanstalk;
  9. AWS fargate;
  10. AWS VMware Cloud on AWS.

Compute Service level agreements are different from master service agreements and in case of any dispute, SLA will apply. 

Analysing the Amazon compute SLA agreements 

Key components of a computer Service level agreement include services and management. Whereas, in service level agreements services include service availability, standard time for the opening of a window, conditions of service, escalation of payment, responsibilities of the parties, etc. Whereas, management includes all the clauses wherein management is defined or explained, such as definition clauses, content, and frequency, reporting methods, dispute resolution, indemnification, breach of agreement, novation and amendment, etc.

  • Here reliance is put on Amazon elastic Compute Cloud (Amazon EC2), whereas, in the Service level agreement of Amazon service cover four services such as Amazon elastic Compute Cloud (Amazon EC2) Amazon Elastic Block Store (Amazon EBS), Amazon elastic container service and Amazon Fargate for Amazon ECS and Amazon EKS.
  • The purpose of the SLA is clearly explained by absolute inclusion and exclusion of the services provided. Four products are covered under the term services which are pre-defined in the other agreements. 
  • Terms of the SLA are not written, rather the updated date is written as of July 22, 2020, and, SLA should be updated every day or frequently.
  • Service commitment provides an uptime percentage of at least 99.99% during a monthly billing cycle at each AWS service region. This clause provides the authority of the customer to fix the loopholes in the service provided.
  • The availability and reliability are agreed to provide service credits. Service credit is the percentage of total charges paid minus one-time payment. Whereas, in the case of services provided to individual service credit is calculated on any affected AWS region for the monthly billing cycle as per unavailability. The service credit will be 10%, 30% & 100% in case of uptime percentage less than 99.99% but equal to or greater than 99.0%, less than 99.0% but equal to or greater than 95.0%, and less than 95.05%. The service credit clause clearly explains the meaning of unavailability and under what circumstances the service credit will be credited. 
  • Credit request and payment procedures shall be initiated by the next billing month as per the appropriate procedure. The procedure has been clearly explained in the agreement. 
  • Further, the hourly uptime percentage of throughput is 90% as compared to 99.99 of monthly uptime before. It does cut down the risk factor. In case the service provider is unable to meet the expected hourly commitment of 90% then the same shall not be charged for that hour usage.
  • The agreement demarcates the exceptional case and exclusions. In case of any damage or disaster, the service credit will be provided but does not give the details of the disaster or major event.
  • Amazon’s Elastic compute cloud 2 (EC2) puts the burden of providing the burden of violation of the SLA agreement on the consumers. The consumer shall enforce the Service level agreements. In case of any conflict, SLA shall apply only to the extent of the conflict. 


The concept of computing Service level agreements has been explained above. The Amazon compute service level agreement has missed out on a few things. 

The Agreement should include a clause to define the repercussions of breach of the service level agreement. In this era of cyber vulnerability,  security should be given paramount importance. The SLA shall also include an incident handling clause, the role of management in case of the incident shall be prioritized or planned to avoid complexity and chaos by setting priorities.

In case of major incidents, a target time should be set for response and resolving the dispute without any delay. SLA also does not detail about periodical maintenance of the services. It is equally important to monitor the frequency of the system as is to provide the services. Also, no clause to define the reporting system and uptime percentage to analyse the availability is there. Reporting time is necessary to get quality output.

Amendments are made as per the needs of the parties but Amazon’s compute service level agreements detail out almost all the service-related complex clauses. It does not penalise the service provider, but this agreement favours the service provider and is highly negotiable, therefore.


Students of Lawsikho courses regularly produce writing assignments and work on practical exercises as a part of their coursework and develop themselves in real-life practical skills.

LawSikho has created a telegram group for exchanging legal knowledge, referrals, and various opportunities. You can click on this link and join:

Follow us on Instagram and subscribe to our YouTube channel for more amazing legal content.


Please enter your comment!
Please enter your name here