NSA Spying Scandal Could Cost U.S. Cloud Computing Firms $35 Billion

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Symbol image, cloud computing. User sends data to an external server an gets access to his data from everywhere in the world.
Alamy
Would you store your data with a company if you had reason to believe that by doing so, you were essentially giving a government a free pass to access that valuable information at any time? A lot of people and businesses would say no.

So the recent revelations of widespread electronic snooping by the National Security Agency should have the burgeoning cloud computing industry worried. How worried? A report released Monday by the Information Technology and Innovation Foundation, a Washington, D.C.-based think tank, suggests that cloud companies could lose as much as $35 billion in revenue over the next three years as a result of the PRISM spying scandal.

Much of the cloud industry currently resides in the U.S., with major players including Google (GOOG), Amazon (AMZN) and Microsoft (MSFT). But the report notes that other countries are racing to seize a share of what's projected to be a $207 billion industry by 2016. And a scandal that calls into question the privacy of data stored with American companies could provide these foreign competitors with an opening.

To that point, the report quotes Neelie Kroes, the European Commissioner of Digital Affairs, who last month observed that "If European cloud customers cannot trust the United States government, then maybe they won't trust U.S.cloud providers either."
The report also takes note of European business leaders and politicians who have raised the specter of government snooping of American cloud services, both before and after revelations of the NSA's PRISM program became public.

The report estimates that the ongoing controversy could cost American companies anywhere from 10 percent to 20 percent of the foreign market, which adds up to somewhere between $21.5 billion and $35 billion in lost market share over the next three years. And those numbers aren't pulled out of thin air -- the organization notes that when the Cloud Security Alliance polled its members in June and July, 10 percent of foreign members said they had canceled a project with a U.S. based cloud service. And 36 percent of U.S. residents polled said that they were having more trouble doing business outside the country following the PRISM revelations.

So the scandal didn't just shake Americans' faith in the government -- it also has the potential to cost the economy tens of billions of dollars. No wonder the administration is so angry about the leak.

Matt Brownell is the consumer and retail reporter for DailyFinance. You can reach him at Matt.Brownell@teamaol.com, and follow him on Twitter at @Brownellorama.

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27 Comments

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wowinblad

Now we just need to dumb down the news so that the "low information"(low intelligence)voters can understand it.
There are still a lot of O'bots out there.
Keep talking to your stupid friends, they are starting to come around.

August 08 2013 at 11:56 AM Report abuse rate up rate down Reply
William Hewitt

Biden and Obama spell BO and they are the "Lying & Spying" government! Germany will have to close all American business and embassy to stop NSA thugs and BO drones. Hey BO when you gonna bomb those krauts?

August 08 2013 at 3:49 AM Report abuse rate up rate down Reply
deb

I don't really understand why people are shocked, the goverments been doing this since the 50s.Anybody who ever though info was safe on a comput,well that's like people that think once you delete something it goes to outerspace or where ever the heck LOL

August 07 2013 at 5:01 PM Report abuse rate up rate down Reply
jbakerjonathan

Just like a petulant teenager, the feds put the blame on others for the blow-back due to their unconstitutional actions, not withstanding the FISA court's blessing on same. How much simpler and more pleasant life would be if government were to behave. We just have to find and vote into office the politicians with the right set of values and life will be wonderful again. 8^) The vast majority of the current pols need to be retired at the next set of elections.

Given the make-up of the current administration that lies to Congress (e.g.., NSA Director Clapper's denial back in March) and gets away with it , Snowden took the correct action in blowing the whistle to The Guardian newspaper over the unlawful actions of NSA and the PRISM program. This action insured that the unconstitutional program would be exposed for all to see and for all to understand the enormity of the crime, rather than to be buried or "managed" by the organization taking the unconstitutional action.

Whistleblowing requires the breaking of law in order to expose unlawful actions of government. To have it otherwise would allow an unchecked and unlawful government to exist. None of us want that. "I was only following orders" doesn't cut it. That was established at the Nuremberg trials back in 1946 to 1949. One overarching duty is to uphold the Constitution of these United States.

August 07 2013 at 3:15 PM Report abuse -1 rate up rate down Reply
Virginia

Snowden's mouth made America a germ ! All World Nations spy on the General Public, Snowden had no loyal conduct for America, why is he in Russia, Russia has Nuclear Missles targets for America in all States ! Russian Government is not America ! Who is Snowden ? Who hired Snowden with such a poor educational background ? Any 13 year American child can be a computer genius. Snowden was
hired with a poor educational background. How Stupid is Snowden to trust Russia and he told his secrets to the World about America ! Snowden is dumb and the person who hired him should be put in jail too ! Freedom in America now means: The United States of America is Free to Spy on you !
The Cloud Computing is finish in America now, they will have to use a hidden codes now to keep Secrets. Can Snowden speak Russian?

August 07 2013 at 1:31 PM Report abuse -5 rate up rate down Reply
1 reply to Virginia's comment
Bill

Wow! Who are you to speak of a poor educational background? Your's is showing.

August 07 2013 at 3:13 PM Report abuse rate up rate down Reply
krattjd

Buy an larger HD, better yet have an old computer to store info on home server

August 07 2013 at 11:54 AM Report abuse rate up rate down Reply
1 reply to krattjd's comment
tony

an?

September 24 2013 at 3:33 PM Report abuse rate up rate down Reply
Gary Astorino

And look at what happened to companies like Megaupload where the government can just come in at any time, take all of your data and destroy it if they think you violated any kind of rule. This was a company storing many business records. Wonder how many firms lost everything because of that.

August 07 2013 at 11:54 AM Report abuse +2 rate up rate down Reply
2 replies to Gary Astorino's comment
illusionstool

Hi Gary-
I worked in China for a few years and the Communist Chinese government would come into businesses co owned by foreigners and without notice they would come in and copy all of the hard drives, especially anything that had to do with engineering, in that way they could steal any information they wanted to use and didn’t have to pay one cent…

August 07 2013 at 12:38 PM Report abuse +1 rate up rate down Reply
tony

Worked in china, well good job comrade.

September 24 2013 at 3:34 PM Report abuse rate up rate down Reply
clark

if its on the net it's open season,,nobody is hidden,,,there are no secrets...

August 07 2013 at 11:44 AM Report abuse rate up rate down Reply
SABRINA

I do believe that most people are stupid when it comes to computers and computing. When they talked about put all your information in the "Computer cloud for storage and safety and it's protected" come on people . When it in the "cloud" anyone can see it.

PS: The people that sell anti-virus software hire tthe people to make the virus out there.

Have a nice day.

August 07 2013 at 11:08 AM Report abuse +2 rate up rate down Reply
jamesplang

Thank you Mr. Snowden for making clear how opaque and overreaching the US military and intelligence complex has become. I won't be storing any info with google or microsoft or any other lay down big data lap dog. Back to faxes, letters and face to face meetings.

August 07 2013 at 11:00 AM Report abuse +8 rate up rate down Reply
1 reply to jamesplang's comment
tony

The govt loves such articles.

September 24 2013 at 3:33 PM Report abuse rate up rate down Reply