Our First AI Warning: Why Using AI Services Can Breach Your Contracts

We recently received our first AI Warning. This was not a a general warning such as, “anything built for good can be use for evil” or “AI can replace you.” We received a direct warning about specific uses of artificial intelligence services and our contracts. The warning we received applies to you as well.

Some Background About this AI Warning

Cumulus Global is known for our professional services, including our ability to successfully manage cloud migrations from a variety of local environments. We often provide these services to other technology firms that need our expertise and experience to solve specific client needs. We have standing partnership agreements with several of these firms.

The AI Warning came from one of our partners.

The AI Warning

The warning we received centered on our potential use of AI services and the implication for confidential information belonging to our partner and their clients. The warning stated that providing this data to any AI system or tool is a likely violation of our contract, confidentiality, and non-disclosure agreements.


  • Providing confidential information to any AI system or tool is an authorized disclosure unless we have a contractual agreement in place with the AI vendor that ensures all data remains private and confidential.
  • The use of any confidential information for feeding or training AI system or tool is considered an authorized disclosure. Even if the AI system or tool is private the confidential information will be used outside the scope of any project, work, or need.

In addition to clearly defining limits on the use of their data with AI services, the warning included the company’s intent to pursue any and all contractual and legal methods to prevent, or in response to, disclosures.

Bigger Context

While this AI warning was specific to one business relationship, we see a bigger context. The current flood of AI services is exciting, and the potential uses and benefits are great. If we want to engage, however, we need to be careful. Whether we are deliberately training an AI system or creating prompts and providing feedback to refine answers, we are placing information in the hands of others. Unless we take explicit steps to ensure privacy with AI tools, our expectation must be that the information we provide will be used train the AI service, effectively placing the information in the public domain.

We must also recognize that the generative nature of AI increases the risk of improper disclosure. While we may not intend to disclose information, AI engines can recognize and correlate information. In other words, AI services can piece together data to create and share  information that should be private.

Your Action Plan to Prevent AI Issues

Take a step back and plan your approach to AI.

  • Consider how and when you want to use AI in your business
  • Make sure you, and your team, understand your contractual and regulatory responsibilities with respect to information privacy
  • Assess the AI tools and services you plan to use;
    • Understand their data privacy commitments
    • Match privacy polices and commitments against your business and legal requirements
    • Opt-in to agreements, even if it requires paying for the service, that ensure data privacy

With an understanding of your requirements and AI services, AI can add value to your business without introducing significant avoidable risk.

We Can Help

To discuss your technology service needs and plans, click here to schedule a call with a Cloud Advisor or send us an email.

About the Author

Allen Falcon is the co-founder and CEO of Cumulus Global.  Allen co-founded Cumulus Global in 2006 to offer small businesses enterprise-grade email security and compliance using emerging cloud solutions. He has led the company’s growth into a managed cloud service provider with over 1,000 customers throughout North America. Starting his first business at age 12, Allen is a serial entrepreneur. He has launched strategic IT consulting, software, and service companies. An advocate for small and midsize businesses, Allen served on the board of the former Smaller Business Association of New England, local economic development committees, and industry advisory boards.