// Blog / Security

Secure data exchange for organizations: Virtual data room or cloud storage?

Cybercrime and industrial espionage have been on the rise for years and are no longer just a threat to large corporations. Small and medium-sized companies are also affected, as are law firms, healthcare facilities and local authorities. According to the German Federal Office for Information Security (BSI), the threat in cyberspace was higher in 2023 than ever before.

But despite all the warnings, some companies are still using cloud storage solutions such as Dropbox, Google Drive or Microsoft OneDrive to share sensitive business information. Individual employees or specialist departments often opt for such file-sharing services, exposing their company – probably unknowingly – to a number of risks. This is because these cloud services do not fully meet data protection and IT security requirements, nor can all compliance guidelines be adhered to.

The secure alternative: a virtual data room
A virtual data room, such as the one offered by netfiles, enables businesses, the self-employed and public authorities to meet all of the aforementioned requirements. Thanks to extensive security and control functions, state-of-the-art encryption and security technologies and hosting in Germany, among other things. It is the truly secure alternative to cloud storage and file sharing services.

It is not without good reason that virtual data rooms have now established themselves in due diligence audits, whether for mergers & acquisitions (M&A), financial or real estate transactions. However, a virtual data room should also be the tool of choice in all other areas in which sensitive documents are exchanged with customers, business partners or colleagues. For example, when exchanging data across companies and locations, for construction projects or for secure client communication for auditors and tax consultants.

Security functions of a virtual data room
For companies that value security, data protection and traceable collaboration, a virtual data room such as netfiles offers the following essential functions, among others:

  • Role-based, user-specific access rights to documents,

  • tracking of logins, read access, uploads and downloads,

  • protection of documents from printing and downloading,

  • additional document protection with watermarks,

  • automatic document versioning,

  • redaction of confidential content in documents and

  • 256-bit data encryption.

Data protection and data security: Virtual data rooms are far superior
In addition to the major American providers Google Drive, Dropbox and Microsoft OneDrive, there are now countless, often free, alternatives to cloud storage, file sharing and file hosting services. Many of us are familiar with these services as home users. But what may be sufficient there is hardly suitable for sharing important documents with colleagues, customers or business partners. With cloud storage and similar services, confidential documents are not adequately protected against industrial espionage or other misuse. Companies therefore run the risk of violating data protection, data security and compliance regulations. While cloud storage and file sharing services are primarily about sharing documents widely, security is always the top priority for virtual data rooms.

Encryption is also highly relevant, especially for organizations. However, encrypted transmission is only one part of the security chain. The storage of files in the cloud should also be encrypted. Users of the netfiles data room can rely on the 256-bit encryption of their documents.

On the safe side with German and European providers
Compared to American cloud services, German and European providers have a clear advantage when it comes to data protection – especially protection against potential access to EU citizens' data by government bodies.

Even though the Data Privacy Framework between the USA and the EU came into force in July 2023: According to critics, sufficient data protection is still not guaranteed due to the extensive powers of the US security authorities. Data protection experts therefore recommend using European alternatives to be on the safe side.

netfiles GmbH is a German company with development and hosting in Germany and complies with the strict statutory data protection regulations of the Federal Republic of Germany and the requirements of the EU (General Data Protection Regulation, GDPR).

The netfiles servers are located exclusively in highly secure, certified data centers in Germany. State-of-the-art software, encryption and security technologies ensure that valuable documents are reliably protected against unauthorized access and loss.

Cloud storage and file sharing services such as Dropbox or Google Drive are of course justified: For example, when exchanging non-critical files or when security and compliance requirements do not have to be met. However, when it comes to sensitive business documents such as balance sheets, personnel files or contracts, a virtual data room such as netfiles is the only secure solution. It is designed for professional use in companies, offers maximum security for the audit-proof exchange of business-critical data and ensures that documents do not fall into the wrong hands.