Virtual Data Room Vs. Free Cloud Storage: The Pros, the Cons, and the Facts

5 min read
745 reads
virtual data room, cloud storage software, online data rooms

Virtual Data Rooms (VDRs) and public-access file sharing platforms have a lot in common. But their differences are critical. Let’s take a closer look at each solution so you can make the right decision for your business.

What is cloud storage?

Cloud storage is the technology behind most virtual data rooms and free file sharing platforms. In cloud computing, data exchange happens through internet-based tools and apps. This approach to storing data allows users to exchange information and files from anywhere quickly.

The clouds are not entirely virtual. Every file sharing platform hosts servers that contain the software and user data. The main difference from on-premise storage is that the servers are remote.

Note:

Cloud storage allows file sharing platform users to store and exchange data remotely.

Cloud storage services have many uses, from domestic to industrial. But a free file sharing platform might not be the correct solution for everyone.

Pros and cons of free cloud-storage services

Pros:

  • Quick and hassle-free access
  • Sufficient storage capacities for individual users
  • Integration with other services, such as email

Cons:

  • Data sharing is impossible to control
  • Exposure to breaches and hacks
  • No automatic audit trails
  • Limited toolset and support
  • High human mistake probability

Most household users find the public-access providers sufficient enough. However, businesses and dealmakers need to guarantee added security and functionality.

virtual data rooms, cloud storage, virtual data room software
Virtual Data Room Vs. Cloud Storage

What is a virtual data room?

Virtual Data Room (VDR) is a platform for storing and exchanging confidential data that ensures high security of electronic data by complying with international data room security certifications. The most common VDR use cases include:

Apart from storing sensitive data, a virtual data room can offer many additional tools and services — for instance, user management and tracking, data gathering instruments, templates, and checklists.

Online data room pros and cons

Pros:

  • Detailed user and access management
  • Security standards compliance and certifications
  • Multiple levels of data protection
  • Tailored tools and services
  • 24/7/365 live customer support with short response times

Cons:

  • Cost more than public-access storage services
  • Might require additional training
  • Some VDRs lack integration flexibility

According to a paper by the Institute of Mergers, Acquisitions and Alliances (IMAA), virtual data rooms offer more value to dealmakers than any public-access storage solution. This is due to a combination of a wide tool range and niche focus of most VDR providers.

However, many users hesitate to make the necessary shift because of virtual data room costs. Which brings us to the following question, “Are public-access cloud storage services actually free?”

Are cloud storage services free?

Although most cloud storage providers advertise their services as free, it’s not always the case. Cost-free conditions only apply to limited storage volumes. Nearly all services provide “freemium” packages — limited storage space is offered for free, but additional storage requires an upgrade for a monthly fee. 

The complimentary space is often more than enough for household users. But businesses and independent professionals will very likely face monthly charges for additional storage.

Take a look at what the most popular cloud storage providers charge for extra space:

Cloud storage providerFree Space OfferedAdditional Space Upgrade Options
Google Drive15 GB100 GB for $1.99/month
200 GB for $2.99/month
2 TB for $9.99/month
10 TB for $99.99/month
DropBox2 GBBasic plan – 1 TB for $3.75/month
Pro – $9.99/user/month for 100 GB/month
Business – $15/user/month
pCloud10 GB500 GB for $175/lifetime membership
2 TB for $350/lifetime membership
Microsoft OneDrive5 GB100 GB for $1.99/month
1 TB for $6.99/month$5/user/month
Sync.com5 GB2 TB for $8/month
3 TB for $10/month
4 TB for $15/month
OpenDrive5 GB$12.95/user/month
Egnyte10 GB10 GB for $10/month

Are there free virtual data rooms?

Compared to the typical cloud storage fees, virtual data room costs might seem out of proportion. And a lot of potential VDR users wonder, “Are there free data rooms?

The most straightforward answer is no. Virtual data room costs cover top-quality security measures, constantly evolving technologies, and efficient customer service.

Note:

Some VDR providers offer free trial periods. Most users use the demo time to set up for future operations. But there are also cases when the trial mode satisfies their initial needs.

Safety standard differences

Security is key to choosing a reliable document management tool. A data breach can cost a fair amount of money. What’s more, information leaks can escalate to the loss of trust and result in the company’s operations crashing.

General-access cloud storage has a history of significant breaches. Such as the Dropbox password leak of 2012 or iCloud’s 2014 fiasco. 

The main reason why cloud storage isn’t the equivalent of a free data room is because of the data and file-sharing feature. Users distribute links without any strict tracking or access limitations. These links can then be exposed to hackers through a Google search, for example.

Note:

With public cloud storage, whoever has the link, has access.

Now, virtual data rooms authorize users using several steps:

  1. The administrator invites users to the platform.
  2. Each user creates an account with a password and multi-factor authentication.
  3. Once the user is authorized, their activity is closely monitored. The system tracks:
    • When each document was accessed
    • Access duration
    • How many times each user accessed the document

Such authorization protocol eliminates the risk of free virtual data room access.

Other benefits of virtual data rooms for business

The main reason why general-access cloud storage isn’t the same as a free virtual data room is security. Although virtual data room costs can be high, they are associated with value. Here’s why businesses go for VDRs over free cloud storage:

  • Experienced VDR providers offer all the necessary tools for productive teamwork and governance.
  • Virtual data room software can handle large data volumes and multiple active users.
  • Companies that invite partners and buyers to VDRs come off as more responsible and trustworthy.
  • User-friendly interfaces and free data room training make the VDR experience simple for every participant.
  • Most virtual data rooms can be customized to match specific requirements and visual presentation.
  • Established VDRs undergo strict regulation and auditing.

Virtual Data Room vs. free cloud storage: Final thoughts

A public-access file sharing platform works for storing and sharing non-confidential files. But any type of sensitive data is not safe with cloud-based storage services. It is best to go with a virtual data room to guarantee the utmost security and functionality.

References

  1. Jun, 2019. IBM Cloud Education. https://www.ibm.com/cloud/learn/cloud-storage
  2. “Do Virtual Data Rooms Add Value To The Mergers And Acquisitions Process?” by Dr. Christopher Kummer Vlado Sliskovic. 2007. Imaa-Institute.Org. https://www.imaa-institute.org
  3. Aug, 2016. “Dropbox hack leads to leaking of 68m user passwords on the internet” by Samuel Gibbs. https://www.theguardian.com/technology/2016/aug/31/dropbox-hack-passwords-68m-data-breach
  4. Sep, 2014. “Apple toughens iCloud security after celebrity breach” by Leo Kelion. https://www.bbc.com/news/technology-29237469

Recommended for you

Most popular articles:

Check out the rankings of

The Best Virtual Data Room Providers

September 2021