‘Why should I pay for VDR when I can use Dropbox?’ – our clients ask this question sometimes. Yet the answer is not that straight. Dropbox and Virtual Data Room are, after all, two completely different systems created to satisfy different business needs. So, yes, Dropbox might be better suited to meet some of them, but there are tasks I wouldn’t dare undertake using it.
Both tools are online cloud platforms that allow to create a central file repository that is available to selected users 24/7 through browsers, all around the world. What distinguishes them is the purpose for which they were created. This purpose determines the range of platform functionalities, design of features, security approach (sic!) and the range of services that are offered to customers within a given price range. Let’s take a closer look at both solutions.
Although I represent a VDR provider, it is not my intention to discourage you from using Dropbox. I am convinced that this tool is able to meet the needs of many businesses and individual practices. When I worked at an advertising agency, I used Dropbox myself to transfer large graphic files. But these files were of low business relevance – speed and the ease of transfer where the most crucial in that case. And Dropbox seemed to work pretty well. However, with my current knowledge, I would never decide to use Dropbox to transfer sensitive data, let alone implementing it in such processes as company sales, Due Diligence or audit. Why?
The key functionality of data rooms is the ability to protect stored files so that the users are unable to save a document or print it. They are only allowed to view it. Moreover, users cannot select a fragment of text and copy it or take screenshots (e.g. with Print Screen). These are key security features which make it impossible to “move” information outside the data room. Dropbox does not provide such possibilities. Sure, it has a read-only option but, in fact, it is just a marketing phrase. Enabling the read-only option does block the possibility to edit the file, but it leaves the door open to downloading the document. In the end, the function does not protect sensitive information. If users can download files to their drives, it means they can use them as they want and show them to anyone. As information owners, we lose control over the downloaded file. In Due Diligence, especially if it involves selling of a company, lack of control over who has access to key information is a plain disaster. A situation like that has impact on the final valuation and if the confidential information gets to competition – it will affect business advantage of the company.
OBSERVATION #2: The key role of Support team
Have you ever tried calling Dropbox Support? I have. With no luck, unfortunately. And technical difficulties can affect anyone – you, the administrator, and the people invited to your project. Furthermore, you may not realize how restrictive companies’ policies regarding employee access to external systems are (Dropbox and Data Room are such systems), especially in the financial, energy, Telco and other industries. VDR providers know how to get along with the IT departments of these companies and can quickly overcome complications. When using Dropbox, you have to accept the risk and keep in mind that the user – a single employee or the whole company (e.g. investor’s) for that matter – might not have access to the system and the data put in it because it violates company’s policy. Most likely, no one will help you solve this issue.
OBSERVATION #3: Dropbox and VDR encryption is similar, but does not protect the same
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