US tech companies reel as NSA spying tarnishes reputations

US technology companies are in danger of losing more business to foreign competitors if the National Security Agency's power to spy on customers isn't curbed, the New America Foundation said in a report on Tuesday.

The foundation called for prohibiting the NSA from collecting data in bulk, while letting companies report more details about what information they provide the government. Legislation scheduled to be introduced on Tuesday in the Senate would fulfill some recommendations by the foundation, a Washington-based advocacy group that has been critical of NSA programmes.

Citing concerns from top executives of Microsoft Corp, Cisco Systems Inc. and other companies, the report made a case that NSA spying could damage the $150-billion industry for cloud computing services. Those services are expanding rapidly as businesses move software and data to remote servers.

"The immediate pain point is lost sales and business challenges," said Chris Hopfensperger, policy director for BSA/The Software Alliance, a Washington-based trade association that represents companies including Apple Inc and Oracle Corp.

Microsoft is hearing from customers "that they care more than ever about where their content is stored and how it is used and secured," said John Frank, deputy general counsel for the Redmond, Washington-based software maker.

The company hasn't seen a significant business impact yet, Jack Evans, a Microsoft spokesman, said in an e-mail.

ServInt Corp, a Reston, Virginia-based company that provides website hosting services, has seen a 30 per cent decline in foreign customers since the NSA leaks began in June 2013, said Christian Dawson, its chief operating officer.

"It ends up being death by a thousand paper cuts," Dawson said in a phone interview.

Confidence in technology companies began to be tested a year ago when former NSA contractor Edward Snowden leaked documents that revealed a programme called Prism, under which the US compels companies through court orders to turn over data about their users. The documents also uncovered NSA hacking of fibre optic cables abroad to steal data, and the physical interception of routers, servers and other network equipment to install surveillance tools before they were shipped to users.

International cloud providers are now using the NSA revelations as a marketing tool, said Dawson, who also serves as chairman of the Internet Infrastructure Coalition, which represents Dell Inc, Rackspace Hosting Inc and other companies.

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US tech companies reel as NSA spying tarnishes reputations