It measures against what humans write down when they listen. Humans generally use context, so I'd expect that they would record "cloud" if that was appropriate in context.

The Microsoft system also does this: it uses language modelling to attempt to model what word is more likely in a given context. This gives them a 18% word error rate reduction (see section 7 of the paper: http://arxiv.org/pdf/1609.03528v1.pdf).