This Globe and Mail article discusses another aspect related to the privacy of vendor-hosted services. In this case, the attempted widespread usage of Google services by two Canadian institutions, Lakehead University and the world-renowned SickKids Hospital, generated severe (and legally driven) backlash.
Given the overarching powers of the USA Patriot Act, the USA government can effectively have complete and arbitrary access to any information stored on USA servers, such as those run by Google; the article covers some of the potential implications of that. While the particular service here was Google's SaaS tools, it's obviously far more general than that. Similar issues arose a while back when some Canadian banks were outsourcing some services and hence financial records to US companies. Again, the potential for conflict with Canadian privacy laws was large. This sort of thing should be a concern for organizations in any country outside the USA, not just Canada.
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