Responding to growing controversy, New York has ordered inBloom to delete all of the student records the education technology nonprofit had uploaded to the cloud. The reversal is the latest in a series of setbacks for the Atlanta-based organization.

“As required by statute, we will not store any student data with inBloom and we have directed inBloom to securely delete the non-identifiable data that has been stored,” said Tom Dunn, spokesman for the New York State education department, in an emailed statement. 

Now it’s questionable whether inBloom—launched last year with $100 million from the Bill & Melinda Gates Foundation and the Carnegie Corporation of New York—will ever be able to blossom fully to fulfill its mission. The organization proposes to collect and synthesize reams of student data, store the information in cloud-based servers, and make the information available via easy-to-use data dashboards and other tools. Ultimately, inBloom says it wants to improve education by providing teachers, students, and families with a resource that solves a common technology issue many districts face as instructional software tools fail to “talk to” one another. 

However, inBloom may be finding it hard to locate education officials willing to talk about its services. Fledgling partnerships with districts and states have been abandoned. And the organization did not respond to requests from Education Week about whether it has any contracts pending with districts or states, after originally listing nine as partners.

The organization did issue a statement about the latest setback: “We respect New York State’s decision to provide additional local control, and for also addressing privacy,” inBloom’s spokesman, Adam Gaber, wrote in an email. At the same time, he underscored the organization’s faith in its technology to empower teachers and its plan to “push forward” with its mission.

In New York, a groundswell of opposition against inBloom gathered strength in recent months: last November, 12 parents filed a lawsuit to put a stop to the state’s agreement with the organization, arguing that hosting data in the cloud for use in real-time academic progress reports flouted privacy and parental consent laws. That lawsuit was dismissed in February.

Educators, too, criticized the plan. “Details about the lives of students are moving beyond the school walls to reside in the inBloom cloud,” wrote Carol Burris, principal of the South Side High School, in Rockville Centre, N.Y., in a blog. She argues that there was no reason for the state to have access to specific information about students, including their discipline records.

“We were flagged as a problem, even though we probably have better security and privacy than anything else on the market,” inBloom’s CEO Iwan Streichenberger told my colleague Ben Herold at SXSWedu in March. In fact, inBloom solved a problem, Streichenberger argued, and seeks to be seen as a solution.

The public pushback has come at a high cost, requiring the organization to communicate and educate about privacy and security. “It’s been distracting, frustrating, and painful,” he told Herold, saying that, as a vendor, “I don’t think it’s right for us to be inserting ourselves into that debate.”

Ed-tech vendors are among those most interested in the opportunity to connect with inBloom to provide tools schools and students can use. In fact, while education entities are becoming scarcer in the inBloom circle, 17 vendors are listed on its website.

“While unfortunate, I don’t believe the New York inBloom situation will directly impact the valuable role that software and data-systems providers are delivering to local schools and school districts–including in New York,” said Mark Schneiderman, senior director of education policy for the Software & Information Industry Association, in a phone interview.

“The controversy surrounding the selection of inBloom became bigger than the goal,” said Paige Kowalski, director of state policy and advocacy for the Data Quality Campaign, a nonprofit that provides a national forum on the use of high-quality data in education. “I think [New York’s decision] impacts their ability to meet their goal, in a timely manner, of delivering useful information to teachers and families. This is probably neutral on privacy and security, and a loss for teachers and families,” she said in a phone interview.

It sounds like New York is working on a Plan B. Dunn, the spokesman for New York’s education department, said that, to comply with the enacted budget and its Race to the Top obligations, the state will “continue to explore and pursue alternate paths that help our schools, districts, and BOCES [Boards of Cooperative Educational Services] access secure and cost-effective educational-technology tools that empower and support our teachers, students, and their families.”

Note: inBloom’s main philanthropic supporters, the Gates Foundation and the Carnegie Corporation, have also helped underwrite Education Week‘s coverage of the K-12 marketplace and innovation in education.

.