U.S.-Based Tech Firms May Lose Big Due To PRISM

    August 6, 2013

Cloud computing and storage is a multi-billion dollar business. Companies all over the world turn to Google, Microsoft and others to process and store their sensitive data. Corporate privacy policies ensure that this data remains secret, but that might not remain the case when the NSA comes knocking.

A new study out of The Information Technology & Innovation Foundation has found that the recent revelations regarding PRISM – the NSA’s system of obtaining information from U.S.-based tech firms – has some foreign companies hesitant to do business with the likes of Google and Microsoft. Even before PRISM was leaked, there was already concern in the European community over how much information was being stored with American companies.

That concern has now exploded into outright rejection as many European politicians and companies are calling for a boycott of American tech firms. The ITIF’s findings jibe with a recent poll conducted by The Cloud Security Alliance that found that 10 percent of 207 non-U.S. based tech firms had canceled their plans to utilize U.S.-based cloud services. Another 56 percent said that they were less likely to use those services.

Overall, things are looking grim for the cloud computing business in the U.S. The ITIF report says that U.S.-based cloud services might lose a minimum of $21.5 billion over the next three years as more companies move their business to European and Asian tech firms. In a worst case scenario, the report says that U.S.-based cloud services could lose up to $35 billion by 2016.

The ITIF ends its report with two recommendations for the U.S. government that it thinks will help restore faith in the nation’s tech industry:

First, U.S. government needs to proactively set the record straight about what information it does and does not have access to and how this level of access compares to other countries. To do this effectively, it needs to continue to declassify information about the PRISM program and allow companies to reveal more details about what information has been requested of them by the government. The economic consequences of national security decisions should be part of the debate, and this cannot happen until more details about PRISM have been revealed.

Second, the U.S. government should work to establish international transparency requirements so that it is clear what information U.S.-based and non-U.S.-based companies are disclosing to both domestic and foreign governments. For example, U.S. trade negotiators should work to include transparency requirements in trade agreements, including the Transatlantic Trade and Investment Partnership (TTIP) currently being negotiated with the EU.

Some in the United States government are working to make the NSA more transparent, but they are constantly opposed by the Obama administration and the leaders of both parties in Congress. They argue that the NSA should remain unopposed and shrouded in secrecy for the safety of the nation. Opponents may want to start arguing that there’s safety in economic stability and keeping the NSA shrouded in secrecy threatens one of the nation’s fastest growing businesses.