Category Archives: NSA Spying

NSA spying costs US tech firms billions

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Revelations by former contractor Edward Snowden tying US tech companies to the National Security Agency's surveillance program are beginning to have a major impact on their bottom line, according to industry analysts.

Despite assurances to the contrary, there is a perception that American technology products enabled the government spying program, and the questioning of trustworthiness is having economic ramifications for companies like IBM and Microsoft.

According to a report in The New York Times, Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, estimates the cloud computing industry could lose $35 billion over the next two years. Forrester Research, a technology research firm, predicts those losses could escalate as high as $180 billion.

In a meeting with President Obama on Friday at the White House, tech executives, including Eric E. Schmidt of Google and Mark Zuckerberg of Facebook, were expected to express their frustration over the government's exacerbating of a costly situation.

"Most of the companies in this space are very frustrated," Castro told The Times, "because there hasnt been any kind of response that's made it so they can go back to their customers and say, 'See, this is what's different now, you can trust us again.'"

Anti-American sentiment first arose with the introduction of the Patriot Act, the counterterrorism law expanding government surveillance powers passed in the wake of 9/11, according to Mark J. Barrenechea, who heads OpenText, Canadas largest software company. He said the attitude has worsened "post-Snowden."

That lingering distrust has emboldened other foreign tech companies while continuing to steer potential business away from the US.

Norway's Runbox, which has marketed itself as a safer email service alternative to Gmail by saying it does not comply with foreign court orders seeking personal information, reports a 34-percent increase in customers. Meanwhile, Brazil announced it was ditching Microsoft Outlook for its own email system that uses Brazilian data centers.

"Issues like privacy are more important than finding the cheapest price," Matthias Kunisch, a German software executive, told The Times. Kunisch chose Deutsche Telekom over other US cloud computing providers.

"Because of Snowden, our customers have the perception that American companies have connections to the NSA," he said.

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NSA spying costs US tech firms billions

Snooping saga: NSA spying costs US tech firms

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Microsoft has lost customers, including the government of Brazil. IBM is spending more than a billion dollars to build data centres overseas to reassure foreign customers that their information is safe from prying eyes in the United States government. And, tech companies abroad, from Europe to South America, say they are gaining customers that are shunning United States providers, suspicious because of the revelations by Edward J Snowden that tied these providers to the National Security Agency's vast surveillance programme.

Even as Washington grapples with the diplomatic and political fallout of Snowden's leaks, the more urgent issue, companies and analysts say, is economic. Technology executives, including Mark Zuckerberg of Facebook, raised the issue when they went to the White House on Friday for a meeting with President Obama.

It is impossible to see now the full economic ramifications of the spying disclosures - in part because most companies are locked in multiyear contracts - but the pieces are beginning to add up as businesses question the trustworthiness of American technology products. The confirmation hearing last week for the new NSA chief, the video appearance of Snowden at a technology conference in Texas and the drip of new details about government spying have kept attention focused on an issue that many tech executives hoped would go away.

Despite the tech companies' assertions that they provide information on their customers only when required under law - and not knowingly through a back door - the perception that they enabled the spying program has lingered.

"It's clear to every single tech company that this is affecting their bottom line," said Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, who predicted that the United States cloud computing industry could lose $35 billion by 2016.

Forrester Research, a technology research firm, said the losses could be as high as $180 billion, or 25 per cent of industry revenue, based on the size of the cloud computing, web hosting and outsourcing markets and the worst case for damages.

The business effect of the disclosures about the NSA is felt most in the daily conversations between tech companies with products to pitch and their wary customers. The topic of surveillance, which rarely came up before, is now "the new normal" in these conversations, as one tech company executive described it.

"We're hearing from customers, especially global enterprise customers, that they care more than ever about where their content is stored and how it is used and secured," said John E Frank, deputy general counsel at Microsoft, which has been publicising that it allows customers to store their data in Microsoft data centres in certain countries.

At the same time, Castro said, companies say they believe the federal government is only making a bad situation worse.

"Most of the companies in this space are very frustrated because there hasn't been any kind of response that's made it so they can go back to their customers and say, 'See, this is what's different now, you can trust us again,' " he said.

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Snooping saga: NSA spying costs US tech firms

President Obama meets with tech CEOs over NSA spying

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Facebook CEO Mark Zuckerberg, right, arrives at the White House for a meeting with President Obama over NSA spying. (Alex Wong / Getty Images / March 21, 2014)

March 21, 2014, 3:03 p.m.

SAN FRANCISCO -- Six technology executives including Facebook Chief Executive Mark Zuckerberg and Google Executive Chairman Eric Schmidt met with President Obama on Friday to discuss National Security Agency spying in the wake of revelations that the agency may have infected millions of computers around the world with malware.

Also at the meeting were CEOs Reed Hastings of Netflix, Drew Houston of Dropbox, Alex Karap of Palantir Technologies and Aaron Levie of Box.

The CEOs of Yahoo, Microsoft, LinkedIn and Twitter could not make the meeting.

The meeting comes ahead of a March 28 deadline for recommendations on how to end the NSAs collection of bulk phone records.

Internet companies are closely following the issue because it could affect how the government intercepts Internet data as well.

Zuckerberg recently voiced the jointly held frustration of the tech CEOs that government spying is hurting their businesses around the world.

His comments came after reports surfaced that the NSA may have infected computers with malware by posing as a Facebook server to gain access to users data. The allegations were in documents leaked by former intelligence contractor Edward Snowden to the online news site the Intercept.

The U.S. government should be the champion for the Internet, not a threat, Zuckerberg wrote in a recent post on his Facebook page. They need to be much more transparent about what theyre doing, or otherwise people will believe the worst.

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President Obama meets with tech CEOs over NSA spying

Revelations of NSA spying hurt tech firms

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SAN FRANCISCO -- Microsoft has lost customers, including the government of Brazil.

IBM is spending more than a billion dollars to build data centers overseas to reassure foreign customers that their information is safe from prying eyes in the U.S. government.

And tech firms abroad, from Europe to South America, say they are gaining customers who are shunning U.S. providers, suspicious because of revelations by former National Security Agency contractor Edward J. Snowden that tied these providers to the vast NSA surveillance program.

Even as Washington grapples with the diplomatic and political fallout of Mr. Snowden's leaks, the more urgent issue, companies and analysts say, is economic. Tech executives, including Mark Zuckerberg of Facebook, raised the issue Friday when they went to a White House meeting with President Barack Obama.

It is impossible to see now the full economic ramifications of the spying revelations -- in part because most companies are locked in multiyear contracts -- but the pieces are beginning to add up as businesses question the trustworthiness of U.S. technology products.

Meanwhile, the confirmation hearing last week for the new NSA chief, the video appearance of Mr. Snowden at a technology conference in Texas and the drip of new details about government spying have kept attention focused on an issue that many tech executives have hoped would go away. Despite the tech firms' assertions that they provide information on their customers only when required under law the perception that they enabled the spying program has lingered.

"It's clear to every single tech company that this is affecting their bottom line," said Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, who predicted that the U.S. cloud computing industry could lose $35 billion by 2016.

Forrester Research, a technology research firm, said the losses could be as high as $180 billion, or 25 percent of industry revenue, based on the size of the cloud computing, Web hosting and outsourcing markets and the worst-case scenario for damages.

The business effect of the Snowden revelations is felt most in the daily conversations between tech companies with products to pitch and their wary customers. The topic of surveillance, which rarely came up before, is now "the new normal" in these conversations, as one tech company executive described it.

"We're hearing from customers, especially global enterprise customers, that they care more than ever about where their content is stored and how it is used and secured," said John E. Frank, deputy general counsel at Microsoft, which has been publicizing that it allows customers to store data in Microsoft data centers in certain countries.

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Revelations of NSA spying hurt tech firms

NSA spying starts costing US tech companies as some foreign customers leave

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SAN FRANCISCO Microsoft has lost customers, including the government of Brazil.

IBM is spending more than a billion dollars to build data centers overseas to reassure foreign customers that their information is safe from prying eyes in the United States government.

And tech companies abroad, from Europe to South America, say they are gaining customers that are shunning United States providers, suspicious because of the revelations by Edward J. Snowden that tied these providers to the National Security Agency's vast surveillance program.

Even as Washington grapples with the diplomatic and political fallout of Mr. Snowden's leaks, the more urgent issue, companies and analysts say, is economic. Tech executives, including Eric E. Schmidt of Google and Mark Zuckerberg of Facebook, are expected to raise the issue when they return to the White House today for a meeting with President Obama.

It is impossible to see now the full economic ramifications of the spying disclosures in part because most companies are locked in multiyear contracts but the pieces are beginning to add up as businesses question the trustworthiness of American technology products.

The confirmation hearing last week for the new N.S.A. chief, the video appearance of Mr. Snowden at a technology conference in Texas and the drip of new details about government spying have kept attention focused on an issue that many tech executives hoped would go away.

Despite the tech companies' assertions that they provide information on their customers only when required under law and not knowingly through a back door the perception that they enabled the spying program has lingered.

"It's clear to every single tech company that this is affecting their bottom line," said Daniel Castro, a senior analyst at the Information Technology and Innovation Foundation, who predicted that the United States cloud computing industry could lose $35 billion by 2016.

Forrester Research, a technology research firm, said the losses could be as high as $180 billion, or 25 percent of industry revenue, based on the size of the cloud computing, web hosting and outsourcing markets and the worst case for damages.

The business effect of the disclosures about the N.S.A. is felt most in the daily conversations between tech companies with products to pitch and their wary customers. The topic of surveillance, which rarely came up before, is now "the new normal" in these conversations, as one tech company executive described it.

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NSA spying starts costing US tech companies as some foreign customers leave