What is a virtual private cloud (VPC)?

Cloud computing has revolutionized business networks, cutting the need for hardware and maintenance tasks while making network design more flexible than ever. On the other hand, the public cloud can feel a little exposed. After all, sharing space with other users increases security risks—and those risks may be unacceptable when storing or processing client data.

Virtual private cloud (VPC) deployments offer a practical solution by creating private zones within the public cloud, and blending the pros of cloud computing with robust security. Even so, using VPCs safely is essential. Let's explore the subject and understand how private cloud technology can work for you.

What is virtual private cloud infrastructure?

A virtual private cloud (VPC) is a logically isolated network hosted within a public cloud. Unlike standard public cloud setups, where users share cloud space with others, a VPC carves out a private, dedicated environment at the network level, even though it runs on shared infrastructure underneath.

This approach lets companies take advantage of the public cloud's flexibility and easy scaling without sacrificing control over their critical resources.

How does a virtual private cloud work?

A VPC runs on infrastructure owned and maintained by a public cloud provider like AWS, Azure, or Google Cloud. The customer doesn't manage physical servers or data center facilities. Instead, they provision a VPC within the provider’s environment and control how it’s configured at the network level. VPCs rely on several methods to keep resources isolated and secure:

• Private IP addresses and subnets. When you create a VPC, you define a private IP address range and divide it into subnets. These private IP addresses aren’t reachable from the public internet by default, which keeps your resources hidden from other cloud tenants and outside traffic. You then set up route tables, security groups, and access control lists to decide exactly what traffic can flow in, out, and between your subnets.
• Virtual local area networks (VLANs). One way providers separate traffic between tenants on shared physical hardware is through VLAN technology. It segments network traffic so that data from one customer’s environment can’t cross into another’s.
• Virtual private networks (VPNs). For secure connections between a VPC and an on-premises data center, organizations can set up a VPN. A VPN gateway creates an encrypted tunnel over the public internet, letting users and systems access VPC resources without exposing data in transit.

Together, these methods give the cloud provider responsibility for the physical infrastructure, while giving the customer control over the virtual network. This includes IP addressing, subnet design, routing, and security policies.

VPC vs. private cloud vs. VPN

These 3 terms sound similar but serve different purposes. We’ve already covered what a VPC is, so let’s look at the private cloud, which, despite the similar name, works quite differently. A private cloud is a dedicated cloud environment built on infrastructure that a single organization owns or leases exclusively. It offers more control but comes with higher costs and maintenance demands.

A VPN, on the other hand, is a security tool, not a cloud environment. It encrypts traffic between two points, like a remote employee’s device and a corporate network, to protect data in transit. VPNs can work alongside VPCs as a secure access method, but they don’t provide cloud infrastructure or resource hosting on their own.

VPC components and architecture

VPC networks tend to have elements in common. As the VPC diagram below shows, core components include:

• Web gateways. These gateways connect a VPC to the public internet, giving resources in public subnets the ability to send and receive external traffic. Not every VPC needs one, though. If your workloads don’t require internet access, you can skip the internet gateway entirely and keep the environment fully private. For secure connections between a VPC and an on-premises network, a VPN creates an encrypted tunnel into the VPC, protecting data in transit, even when routed over the public internet.
• NAT gateways. One-way gateways that enable outward connections from the VPC to the public internet.
• Subnets. A subnet is a group of IP addresses linking assets within your VPC. VPC subnets can be public or private. Public subnets define resources users can connect with inside the internet gateway. Private cloud subnets are off-limits to public web users and connect to the NAT gateway.
• Routers and route tables. Route tables define the movement of VPC network traffic. Routers use route tables to direct traffic to apps or data containers. Without a properly configured route table, elements of the VPC cannot communicate.
• Security groups. VPC security groups operate like firewall rules at the instance level, regulating traffic between the private and public cloud.
• Network access control lists (NACLs) provide security at the subnet level. They set rules for traffic that enters or leaves a subnet and block unauthorized users.
• VPC peering. Sometimes, users need to connect resources on different virtual private clouds. Peering uses IPv4 or IPv6 addresses to safely link VPC resources and ensure smooth data flows.

Benefits of using a virtual private cloud

There are many reasons to deploy a VPC instead of relying on less isolated public cloud setups or on-premises infrastructure. For instance, virtual private cloud benefits include:

• Easy scaling. Users can add VPC capacity as needed. They don't need to install hardware or software solutions; they can purchase cloud space from vendors when needed.
• Improved performance. Well-designed VPCs generally perform better than equivalent on-premises networks or public cloud resources.
• Flexibility. Users can connect VPC infrastructure to the public cloud or on-premises assets. They can accommodate remote working arrangements and communicate across geographical regions without relying on public internet connections.
• Security. VPCs provide secure work and data storage environments, provided cloud vendors update their infrastructure regularly. Logical isolation also makes VPCs more secure than relying on public cloud computing.
• Value for money. Deploying a virtual private cloud is cost-effective. Installation requires little human labor, and you can often rely on off-the-shelf solutions. Hardware overheads are low, while your cloud vendor should handle most maintenance needs.

Virtual private cloud use cases

VPCs are a good fit for a range of scenarios where organizations need cloud flexibility with tighter control over their network. Here are some of the most common ways companies put them to use:

• Hosting web apps. Companies can run customer-facing applications inside a VPC, placing web servers in a public subnet that accepts incoming traffic while keeping databases and backend services in private subnets with no direct internet exposure.
• Development and testing. Teams can spin up isolated environments to build and test software without affecting production systems. Since VPCs scale on demand, developers can create and tear down test environments as needed without long-term infrastructure commitments. This makes VPCs a natural fit for DevOps practices too, where CI/CD pipelines can deploy, test, and validate code in isolated VPC environments before pushing changes to production.
• Compliance. Industries like finance and healthcare that handle data under strict compliance requirements can benefit from VPC isolation, access controls, and encryption options. These features make it easier for these industries to meet regulatory standards like PCI DSS or HIPAA while still running in the cloud. Major cloud providers have made this even more accessible by bundling compliance tools, confidential computing capabilities, encryption options, and data residency controls directly into their VPC offerings.
• Hybrid cloud extension. Companies that operate on-premises data centers can connect them to a VPC through a VPN or dedicated connection, moving specific workloads to the cloud while keeping others on-site. For example, a healthcare company might host its patient portal in a VPC, placing the front-end application in a public subnet and storing patient records in a private subnet with strict access controls. This keeps the portal accessible to patients while meeting HIPAA data protection requirements.

Security challenges associated with using VPCs

One of the main benefits of virtual private cloud systems is that VPC deployments are usually more secure than public cloud alternatives and traditional networking.

However, using VPC in cloud infrastructure can create security vulnerabilities. Users should understand the risks before permanently moving assets to VPC environments.

1. Misconfigured routes to the public internet

Generally, attackers find it difficult to hop from a public cloud provider to private cloud assets. Isolation by VLANs and subnets minimizes the risk of unauthorized infiltration.

However, default subnet configurations can leave open routes to and from the external internet. Administrators may also fail to secure subnets via network access control lists. Hence, VPC best practices always include changing default configurations to reflect your cloud architecture.

Adding access control lists is also recommended. The absence of ACLs makes it easier for attackers to access subnets that should be restricted within the VPC.

2. Lateral movement within the VPC

Malicious actors accessing VPC infrastructure can move between peered resources and seek compromised applications or storage containers. For instance, infrequently updated security rules may not cover virtual machines, raising the risk of data breach attacks.

Similarly, access control lists and subnets can become misaligned, enabling lateral access to resources that should be off-limits.

3. Unauthorized access through weak controls

The issues above are important, but unauthorized access is the most significant VPC cybersecurity risk.

Problems often arise when cyberattackers obtain credentials or breach firewall protection. Insecure service endpoints may enable easy access to the entire deployment. Weak access controls and privileges management can allow excessive access - exposing customer records or financial data.

When that happens, attackers can roam freely within a virtual private cloud and cause chaos. So, how should you secure access to your VPC and prevent unauthorized intrusions?

VPN coverage is essential. Site-to-site VPNs create secure connections between offices or remote work locations and your VPC gateway. When users log in, the VPN shields their activity, making credential theft attacks much less likely.

NordLayer enables users to connect directly to AWS or another cloud provider via a dedicated VPN. We recommend adding this security feature to ensure watertight private cloud security.

Major virtual private cloud providers

VPCs are not mom-and-pop operations. Big global corporations usually host virtual cloud infrastructure and offer diverse products to suit client needs. Let's run through popular cloud provider options before exploring how to perfect your VPC setup.

• Amazon Web Services (AWS). AWS is the market leader in VPC services, claiming around 32% of all cloud hosting revenues. Users can rent virtual machines via the Amazon Elastic Compute Cloud (EC2) and use Amazon Relational Database Service (RDS) to manage databases in the cloud. Basic VPC is free, but extra costs apply for services like NAT gateways.
• IBM Cloud. IBM's VPC offering uses a software-defined network (SDN) model to deliver VPC solutions. Users mix and match computing, storage, and networking architecture. Pay-as-you-use billing allows flexibility and cost-effective scaling.
• Google Cloud. Google's VPC is similarly flexible and covers every geographical region. Features include flow logs, peering, central firewall management, and free credits to get smaller businesses started.
• Microsoft Azure. Azure is Amazon AWS' main competitor. Microsoft's VPC includes a built-in IPSec VPN, granular controls over communication between subnets, and peering and NAT gateways for maximum flexibility.

Securing access to a VPC with NordLayer

If you decide to use a VPC, you must also implement the right security options to safeguard your data and applications. NordLayer is compatible with the most popular VPC solutions and can enhance your security by protecting who can access the information stored there.

To secure your VPC, consider implementing the following measures:

• Secure remote access: Users need secure access to resources and applications inside the VPC. NordLayer’s site-to-site VPN provides an encrypted tunnel. This allows secure access to the VPC without exposing data to public internet threats.
• Preventing unauthorized access: NordLayer’s cloud firewall adds an extra security layer by allowing you to control who can access the VPC. This restricts unauthorized users’ access to the VPC and, in that way, secures the company’s data.
• Device posture security: NordLayer’s device posture security ensures that only approved devices that meet company security policies can connect to the VPC. This reduces the risk of compromised or non-compliant devices accessing sensitive data.

NordLayer’s powerful suite of security tools makes it easy to protect your VPV and ensure that only the right users and the right devices can access your resources. We can help you benefit from VPC architecture without putting critical information at risk. To find out more, contact the NordLayer team today.