San Francisco: 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 U.S. government.

And tech companies abroad, from Europe to South America, say they are gaining customers that are shunning U.S. 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 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 on Friday for a 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 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 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 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.

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Revelations of NSA spying hurt US tech companies

NSA Spying vs Watergate | London Real
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10 hours ago by Glenn Chapman Former NSA contractor Edward Snowden appears by remote-controlled robot at a TED conference in Vancouver on March 18, 2014

The deputy head of the NSA spying agency accused fugitive intelligence contractor Edward Snowden on Thursday of displaying "amazing arrogance" in revealing US eavesdropping techniques.

NSA deputy director Richard Ledgett argued that Snowden, hailed as a hero by many for exposing the vast scope of the National Security Agency's online snooping, had done a disservice to whistleblowers.

Ledgett was addressing the TED ideas conference through a hastily arranged videolink after Snowden, in a rare appearance from his Russian hideaway, had appeared in similar fashion two days earlier.

"We didn't realize that he was going to show up, so kudos to you guys for arranging a nice surprise like that," Ledgett said, kicking off a video chat with TED curator Chris Anderson.

More revelations to come

Snowden appeared from his Russian exile Tuesday in the form of a remotely-controlled robot that rolled around the TED stage and promised more sensational revelations.

"Some of the most important reporting to be done is yet to come," he said, his face appearing on a screen borne by the robot.

Snowden, a former NSA contractor who has been charged in the United States with espionage, sparked a debate in Vancouver over whether he is a traitor or a whistleblower.

Ledgett said he wanted to weigh in at TED with the NSA perspective since Snowden had, he claimed, mixed "kernels of truth" with misleading information.

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NSA: Snowden does disservice to whistleblowers (Update)

TCR Live #16: NSA Spying, 9/11 Report, The Way of the Shaman
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Google Inc. (GOOG) Chief Executive Officer Larry Page criticized the National Security Agencys surveillance activities, calling for limits on what the U.S. government can do.

Its tremendously disappointing that our government did this and didnt tell us, Page said during a presentation at a TED technology and design conference in Vancouver. We need to know what the parameters of this are.

Page has said little publicly about the NSAs data collection since co-authoring a blog post in June following last years release of documents by former NSA contractor Edward Snowden that disclosed how global spy agencies gather vast amounts of data about phone calls and online activities. The revelations, which showed that authorities had been gathering data from companies such as Google, Facebook Inc. and Apple Inc., frayed U.S. relationships with countries such as Brazil and Germany and set off a global debate about the violation of privacy to bolster security.

The proliferation of digital and wireless devices has boosted the amount of information that can be gathered on individuals, Page said.

We need to have a debate about that, or we cant have a democracy, Page said. The world is changing, you carry a phone, it knows where you are. Theres so much more information about you. The main thing we need to do is provide people choice -- show them what kind of information is getting collected.

The comment comes less than a week after Facebook CEO Mark Zuckerberg said he called U.S. President Barack Obama to express his frustration over the governments spying.

The U.S. government should be the champion for the Internet, not a threat, Zuckerberg wrote in a post on his Facebook page.

To contact the reporters on this story: Olga Kharif in Portland at okharif@bloomberg.net; Brian Womack in San Francisco at bwomack1@bloomberg.net

To contact the editors responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net Reed Stevenson

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Google CEO Calls NSA Spying ‘Disappointing’

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Google chairman Eric Schmidt may be pretty sure that Google is keeping its users data safe from government snooping, but for CEO Larry Page, thats small consolation.

In an on-stage Q&A at the TED conference in Vancouver, Page said he considers the NSAs far-reaching data collection regime a threat to democracy and an obstacle to technological innovation.

For me, its tremendously disappointing that the government sort of secretly did all these things and didnt tell us, Page told interviewer Charlie Rose. Idont think we can have a democracy if were having to protect you and our users from the government for stuff that we never had a conversation about.

Google, he said, is open to the argument that national security requires the NSA and other agencies need to do some level of electronic eavesdropping but determining the limits of that eavesdropping needs to happen in public if its going to have the publics blessing.

The government actually did itself a tremendous disservice by doing all that in secret, Page said. Ithink we need to have a debate about it or we cant have a functioning democracy. Its not possible.

In addition to the hypothetical harm to individuals whose privacy is invaded, said Page, theres a risk that, by feeding privacy paranoia, the NSA is deterring individuals from sharing personal information in ways that could actually benefit them. He cited medical records as a case where excessive privacy controls interfere with the ability of doctors and researchers to help patients.

Im just very worried that with internet privacy, were doing the same thing were doing with medical records throwing out the baby wiht the bathwater, he said. Were not thinking about the tremendous good that can come from sharing the right information in the right ways.

Source: Forbes

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At TED, Google's Larry Page Says NSA Spying Threatens Democracy

IBM said it has not provided client data to the U.S. National Security Agency or any other government agency under surveillance programs involving the bulk collection of content or metadata.

The enterprise-focused company is the latest among U.S. tech companies to distance itself from NSA surveillance, which has raised concerns among customers worldwide about the safety of their data from U.S. government spying.

The U.S. cloud computing industry could lose $22 billion to $35 billion of its foreign market over the next three years to competitors abroad as a result of the revelations of the NSA programs, think tank Information Technology & Innovation Foundation said in August.

Some nations like Brazil have also considered asking service providers to hold data within the country, a move that some Internet companies like Google have described as potentially fragmenting the Internet.

In a letter to customers Friday, IBM said it had not provided client data stored outside the U.S. to the U.S. government under a national security order, such as an order under the Foreign Intelligence Surveillance Act or a National Security Letter.

Former NSA contractor, Edward Snowden, claimed through disclosures to newspapers that a number of Internet companies were providing real-time access to content on their servers to the NSA under a program called Prism, which the companies denied. The agency also had secretly broken into the main communications that connect the data centers of Google and Yahoo around the world, according to reports.

IBM denied providing client data to the NSA or any other government agency under Prism. It said it does not have backdoors in its products or provide software source code or encryption keys to the NSA or any other government agency for accessing client data.

In a series of commitments to its customers, Robert C. Weber, (IBMs senior vice president for legal and regulatory affairs, and general counsel wrote in the letter, which was also posted online, that in general, if a government wants access to data held by IBM on behalf of an enterprise client, we would expect that government to deal directly with that client.

But if served by the U.S. a national security order for data from an enterprise client and a gag order prohibiting it from discussing the order with the client, the company promises to challenge the gag order through legal and other means, it said.

For enterprise clients data stored outside the U.S., IBM holds that any U.S. government effort to obtain such data should go through internationally recognized legal channels, such as requests for assistance under international treaties. It would challenge through legal and other means a U.S. government order for access to data of enterprise clients stored outside the country, it added.

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IBM denies links with NSA spying program

March 17, 2014

Peter Suciu for redOrbit.com Your Universe Online

IBM denied allegations on Friday that it had cooperated with the NSA. In a letter published to its clients, tech giant IBM attempted to distance itself from the National Security Agency, stating that it had not cooperated with the embattled US spy agency.

The letter was posted on IBMs Building a Smarter Planet Blog, and reportedly written or at least posted by Robert C. Weber, IBM senior vice president, legal and regulatory affairs, and general counsel. In the letter, Weber contends that IBM did provide client data to the NSA, or any other government agency under the program known as PRISM; that IBM did not provide client data in any way under any surveillance program that utilizes the bulk collection of content or metadata; and that IBM does not put backdoors in its products for the NSA or other agencies.

IBM is fundamentally an enterprise company, meaning our customers are typically other companies and organizations rather than individual consumers, Webber wrote. We serve some of the worlds most successful global corporations, helping them achieve their business goals.

Our business model sets us apart from many of the companies that have been associated with the surveillance programs that have been disclosed, he added. Unlike those companies, IBMs primary business does not involve providing telephone or Internet-based communication services to the general public. Rather, because the vast majority of our customers are other companies and organizations, we deal mainly with business data. Our client relationships are governed by contract, with clear roles and responsibilities assigned and clearly understood by all parties. To the extent our clients provide us access within their infrastructure to the type of individual communications that reportedly have been the target of the disclosed intelligence programs, such information belongs to our clients.

Reuters reports that the NSA has co-opted more than 140,000 computers since August 2007 to inject them with spyware. This is according to leaked documents provided from former NSA contractor Edward Snowden. These documents were published by The Intercept news website last week.

The NSA has called the report inaccurate and said that it has not targeted users of global Internet services without appropriate legal authority.

Reports of indiscriminate computer exploitation operations are simply false, the agency said as reported by Reuters.

IBM is one of several US tech companies that have come under the microscope as a result of the ongoing US government spying scandal. Reuters also reported that its sales to China fell by 20 percent in the second half of 2013, after the Chinese government in Beijing encouraged state-owned companies to buy Chinese-branded products for fear of US government spying.

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IBM Denies Any Involvement In NSA Spying Efforts

Ron Paul: It is ironic a bit that Feinstein doesnt care about our privacy, but lo and behold, she does care about her own when they tap into her computers.

The reaction of Sen. Dianne Feinstein (D-CA) to last weeks revelations that the CIA secretly searched Senate Intelligence Committee computers reveals much about what the elites in government think about the rest of us. Spy on thee, but not on me! The hypocrisy of Sen. Feinstein is astounding. She is the biggest backer of the NSA spying on the rest of us, but when the tables are turned and her staff is the target she becomes irate. But there is more to it than that. There is an attitude in Washington that the laws Congress passes do not apply to Members. They can trample our civil liberties, they believe, but it should never affect their own freedom. Remember that much of this started when politicians rushed to past the PATRIOT Act after 9/11. Those of us who warned that such new powers granted to the state would be used against us someday were criticized as alarmist and worse. The violations happened just as we warned, but when political leaders discovered the breach of our civil liberties they did nothing about it. It was not until whistleblowers like Edward Snowden and others informed us of the abuses that the debate over surveillance that President Obama claimed to welcome could even begin to take place! Left to politicians like Dianne Feinstein, Mike Rogers, and President Obama, we would never have that debate because we would not know. Washington does not care about our privacy. When serious violations are discovered they most often rush to protect the status quo instead of defending the Constitution. Senator Feinstein did just that as the NSA spying revelations began to create pressure on the Intelligence Community. Her NSA reform legislation was nothing but a smokescreen: under the guise of reform it would have codified in law the violations already taking place. When that fact became too obvious to deny, the Senate was forced to let the legislation die in the committee. What is interesting, and buried in the accusations and denials, is that the alleged CIA monitoring was over an expected 6,000 page Senate Intelligence Committee report on the shameful and un-American recent CIA history of torture at the gulag archipelago of secret prisons it set up across the world after the attacks of 9/11. We can understand why the CIA might have been afraid of that information getting out. When CIA whistleblower John Kiriakou exposed the CIAs role in torturing prisoners he was sent to prison for nearly three years. But Senator Feinstein and her colleagues didnt lift a finger to support him. So again you have the double standards and hypocrisy. The essence of this problem has to do with the difficulty in managing the US empire. When the government behaves as an empire rather than as a republic, lying to the rest of us is permissible. They spy on everybody because they dont trust anybody.

The answer is obvious: rein in the CIA; remove its authority to conduct these kinds of covert actions. Rein in government. Lawmakers should not defend Fourth Amendment rights only when their staffs have been violated. They should do it all the time for all of us. The peoples branch of government must stand up for the people. Lets hope that Sen. Feinstein has had her wake-up call and will now finally start defending the rest of us against a government that increasingly sees us as the enemy.

AN/ISH

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Spying is bad on Senate, but not on us?