What it means
Cloud AI means using AI models and services that run on a provider's infrastructure and are accessed over the internet, usually through an API or web application. The provider operates the hardware and model; the organisation pays for usage.
Real-world example
A mid-sized foundation uses a cloud AI service to transcribe and summarise recorded interviews for an oral history project. The team checks where the provider processes data, signs a data processing agreement, and gets consent from interviewees that covers this processing.
Why it matters for AI adoption
Cloud AI offers fast access to powerful models without buying hardware, but it raises questions about where data is processed, which country's laws apply to the provider, how data is retained and whether it is used for training. "Data stored in the EU" does not by itself settle every legal or sovereignty question.
Often confused with
Cloud AI runs on a provider's infrastructure; on-premises AI runs on infrastructure the organisation controls. Many organisations use both, choosing per use case based on data sensitivity, cost and capability.
Questions to ask
- Where is our data processed and stored, and which legal jurisdictions apply to the provider?
- Does the provider retain our inputs or use them to train models, and what does the contract say?