Free model tiers and client data
For internal tooling, yes. For client data, no. Free tiers are typically funded by the prompts sent to them, carry no data-processing agreement, offer no service level, and change quota without notice. For health information under the Privacy Act 1988, this is a compliance question rather than a cost one.
What you are actually paying with
A free inference tier is a commercial arrangement in which the consideration is your data. That is a reasonable trade for prototyping and internal work. It is not a reasonable trade for someone else’s patient records.
The operational risk, separately
Free tiers deprecate models without notice and change quotas without warning. A production system with a hardcoded model name on a free tier is one provider decision away from an outage — which is why the fallback chain matters as much as the agreement.
Where the line sits
- Internal agents, prototypes and evaluation: free tiers are appropriate.
- Anything touching client data: a paid provider under a data-processing agreement with zero retention configured.
- Australian health information: sensitive information under the Privacy Act, with a materially higher bar for collection, consent and handling.
- No local hardware means no private inference path — which makes the paid provider mandatory rather than optional.