Vercel's Terms: Your Side Project Is the Training Data

We ran Vercel's Terms of Service, last updated June 1, 2026, through Ex-TerCo's nine-category analysis. It scored 40 out of 100, High Risk. That number is not an accusation of bad faith. Most of what drags the score down is standard cloud-industry boilerplate, and Vercel does a few things that are genuinely better than standard. But two parts of this agreement deserve more attention than they got: what happens to your content on the free tier, and how little Vercel owes you when things go wrong.

Everything quoted below is verbatim from the current terms, checked against the live page on July 29, 2026.

The change almost nobody discussed

On March 17, 2026, Vercel's VP of Legal published a changelog entry announcing updates to the Terms of Service and Privacy Policy. The headline item, in Vercel's own words, under "Defaults by plan for optional AI model training":

"Hobby (including Trial Pro): Opted in for AI model training by default, with self-serve opt-out in Team and Project Settings"

The changelog is specific about what the training datasets include if you are opted in: "Code and Vercel agent chats," "Build and deployment telemetry data and build errors," and "Aggregate traffic stats." It also set a deadline with real consequences: opt out by March 31, 2026 and your data would not be used or shared at all. Opt out later and "your data will not be used or shared from that point forward," which is a careful way of saying that whatever was already used stays used.

When Adobe shipped ambiguous AI language in its 2024 terms, creative professionals revolted loudly enough that Adobe published clarifications within days and later rewrote the terms. We covered that episode in our Adobe deep dive. Vercel's change produced some blog posts and LinkedIn commentary, but the Hacker News submission about it, titled "Vercel will now use code from Hobby plans for AI training by default", collected exactly one point and zero comments. A change Adobe could not get away with quietly became, for a developer platform, a Tuesday.

The same changelog notes one more thing in passing: "While arbitration has always been our method of resolving disputes with international and Enterprise customers, it now also applies to U.S.-based customers." More on that below, because the arbitration section is one of the better-drafted parts of this agreement.

What the terms actually say about your content

Start with the license every user grants, on every plan:

"you grant Vercel a worldwide, non-exclusive, royalty-free, fully paid, sublicensable and transferable license to use, copy, modify, adapt, reproduce, distribute, display, publish, store, perform, and create derivatives of Your Content to provide and improve the Services, develop new products and services, secure and protect the Services"

A hosting provider needs a license to host. It does not strictly need "develop new products and services," and it does not need the license to be sublicensable and transferable, but this phrasing is common across the industry. The unusual part comes next:

"if you are on a Hobby plan or trial Pro plan, you agree that we may use Your Content to train our artificial intelligence ('AI') and machine learning models, and we may share Your Content with third parties for the purpose of developing and improving their products, including training and improving their AI and machine learning models"

Read that twice. On the free tier, the deal is not only that Vercel may train its own models on what you deploy. It may hand your content to third parties so they can train theirs. The changelog says personal information, environment variables, API keys, and other sensitive content are "anonymized and redacted before use or sharing," which is a policy promise layered on top of a contractual right that is written much more broadly.

To Vercel's credit, the terms are equally clear about the paid tiers: "If you are on a paid Pro plan, Model Training is not enabled by default and you may opt in," and "You may opt-out of Model Training at any time by adjusting your Team account settings or by upgrading to an Enterprise plan." The structure is coherent: free users pay with training data, paid users do not, enterprises never do. It is a legitimate business model. It is also a thing you should know you agreed to, because you did, the moment you deployed, since "By using or accessing the Services, you acknowledge that you have read, understand, and agree to be bound by this Agreement."

The Hobby plan is not a smaller Pro plan. It is a different contract.

The free tier's fragility goes beyond training data. Two sentences define your actual tenure on the Hobby plan:

"We may shut down and terminate projects or deployments using the Hobby plan without notice for any reason or no reason."

"All of Your Content on the Services (if any) may be permanently deleted by Vercel upon any termination of your account."

No notice, no reason required, no appeal process described anywhere in the document, and permanent deletion on the way out. In fairness, this is standard free-tier language. Netlify's subscription agreement says almost the same words: "Netlify may shut down Free Usage Tier website projects without notice for any reason or no reason." Free hosting everywhere is a courtesy, not a right. The practical conclusion is the same on every platform: if losing it would hurt, it needs to live somewhere else too.

One clause here is easy to miss and worth knowing if you ever signed up with a work email. If your email domain matches a company Team, an owner of that Team may have the ability "to manage your Project, including to claim control and ownership of any Project you create." Your personal side project, deployed under your employer's domain, can be claimed by your employer's Vercel admin.

One hundred dollars

Now the other side of the ledger: what Vercel owes you. The services are provided "AS IS" with "ALL WARRANTIES, EXPRESS OR IMPLIED" disclaimed, which is universal in cloud contracts. The cap on damages is where it gets concrete. Vercel's total liability cannot:

"EXCEED THE GREATER OF ONE HUNDRED DOLLARS AND THE FEES PAID BY YOU TO VERCEL FOR THE SERVICES UNDER THIS AGREEMENT IN THE 6 MONTHS PRIOR TO THE ACT THAT GAVE RISE TO THE LIABILITY"

Consequential damages, including data loss, are excluded entirely. If you are a Hobby user, your fees are zero, so the cap is one hundred dollars. If a catastrophic failure takes down the launch you spent a year building, the contract's answer is a hundred dollars, and only if you can fit your claim into a direct-damages theory.

Caps like this are normal. The details are still on the aggressive end. Netlify's cap is the greater of one hundred dollars or twelve months of fees, twice Vercel's window. Cloudflare's is the amounts paid in the prior twelve months. And the exceptions to Vercel's cap all point one direction: the cap does not protect you for breaches of your obligations (usage restrictions, confidentiality, payment, indemnity), but no equivalent carve-out exposes Vercel for anything, not even gross negligence, except where state law forces it. The indemnification clause is one-way as well. You cover Vercel's legal bills for claims arising from your content or your use of the service. Vercel offers you no indemnity at all, which is notable for a paid product; enterprise cloud agreements typically include at least an IP infringement indemnity for customers.

Terms that change the moment they are posted

The modification clause is the quietest big grant of power in the document:

"The revised Agreement will become effective immediately after Vercel posts or sends you notice of such changes, and if you use the Services after that date, your use will constitute acceptance of the revised Agreement."

Notice can be an email or just a new version of the page. There is no advance-notice window for anything except pricing, which at least waits for your next billing period. If you dislike a change, "your only remedy is to stop using the Services." Compare GitHub, whose terms promise "30 days' notice of material changes." A promise like that costs a legal team almost nothing and is the difference between a contract you can monitor and one you have to trust.

This matters more than it seems, because it is the mechanism by which everything else in this article arrived. The AI training clause was not in the deal most Hobby users originally accepted. It was posted, it took effect, and continued deployment became consent.

What Vercel gets right

An honest read has to include the good parts, and there are several.

The arbitration section is the standout. Yes, there is binding arbitration with a class action waiver, in San Francisco, under California law, and the document itself flags it in capitals at the top: "PLEASE REVIEW THE MUTUAL ARBITRATION CLAUSE AND CLASS ACTION WAIVER SET FORTH BELOW CAREFULLY." But unlike most consumer contracts, Vercel gives you a real exit. You can opt out of arbitration entirely by emailing legalnotices@vercel.com with the subject line "COMPANY ARBITRATION OPT-OUT" within thirty days of first using the service. Small claims court remains available regardless. There is a mandatory sixty-day informal resolution period before anyone files anything, and Vercel commits that it "will not seek to recover attorneys' fees and costs in arbitration unless the arbitrator determines the claims are frivolous."

Elsewhere: if Vercel terminates your paid account without cause, it "will refund the pro-rated, unearned portion of any amount that you have prepaid," which is fairer than the industry default of keeping everything. Price increases wait for the next billing period with written notice. Paid Pro has model training off by default. You own your account information, and Vercel commits to "reasonable information security policies and processes." None of this is heroic, but plenty of companies we have scored do worse on every one of these points.

The less flattering details: Vercel claims full ownership of System Data, the telemetry and logs generated by your usage, and may "use System Data for any business purposes in its sole discretion." All fees are non-refundable except where the agreement says otherwise, cancellation only takes effect at your next renewal, and if Vercel decides your usage looks anomalous it may charge your card immediately, judged at its sole discretion.

The Ex-TerCo nutrition label

Here is how the nine categories scored. Lower is worse; 0 to 25 is Critical, 26 to 50 is High Risk, 51 to 75 is Medium, 76 to 100 is Low.

Weighted overall: 40/100, High Risk. The full label, with clause-level evidence for every finding, is here.

If you deploy on Vercel, do these things this week

1. Decide about arbitration within your first 30 days. Email legalnotices@vercel.com with the subject line "COMPANY ARBITRATION OPT-OUT" (yes, use that exact subject, it is what the terms specify). Opting out costs you nothing and preserves your right to court. The window runs from your first use of the service.
2. Check your model training setting. Team Settings, then Data Preferences. On Hobby you are opted in by default. Opting out stops future use only, per the changelog, so do it before pushing anything sensitive, not after.
3. Assume the Hobby plan can vanish without warning. Keep your code in git (you do), but also export any data, content, or configuration that lives only in Vercel. Termination can be no-notice and deletion is permanent.
4. Do not deploy confidential code to Hobby or a Pro trial. The terms grant AI training and third-party sharing rights on those tiers. If the code matters, pay for Pro and verify the toggle, or use Enterprise.
5. Be careful with work emails. A Team owner on your email domain may be able to claim ownership of projects you created. Personal projects belong on personal accounts.
6. Cancel before renewal, not after. Cancellation takes effect at the next renewal period and fees are non-refundable. Set spend limits while you are in the dashboard.

None of this means you should leave Vercel. The product is excellent and most of these terms have cousins in every cloud contract you have ever accepted. It means the free tier is not free, it is a trade, and now you know what you are trading.

Ex-TerCo provides automated analysis of legal documents for informational purposes. This is not legal advice. Quotes are from Vercel's Terms of Service as published on July 29, 2026; the document can change at any time, effective immediately, as noted above.