Despite doom-and-gloom predictions that NSA surveillance will strike a blow against American cloud providers' business, those companies are in fact unharmed, according to a Reuters report. And security and encryption providers are actually being helped by the news.
Reuters talked with some of the big Internet companies that Edward Snowden revealed were closely involved in gathering data on people overseas, such as Google and Facebook. Representatives of those companies told Reuters privately they have felt little, if any, effect on their business.
Similarly, cloud providers such as Amazon and Microsoft also say they're seeing no fallout. Microsoft tells Reuters demand "has never been greater."
And smaller US companies offering encryption and security services are seeing improved business overseas and domestically as businesses and individuals work harder to protect secrets.
Soon after the Snowden leak, big Internet companies and their allies warned that American businesses would lose tens of billions of dollars in revenue abroad as distrustful customers sought local alternatives. European politicians cautioned their businesses would lose trust in America. Google filed papers in court earlier this month, warning that the news coverage was causing "substantial harm to Google's reputation and business."
Last month six technology trade groups wrote to the White House to urge reforms to spy programs, citing a study predicting $35 billion cumulative shortfall by 2016 in the technology sector. But that number was extrapolated from the Cloud Security Alliance's survey of 207 non-US members. And the CSA cautioned that its members aren't representative of the entire industry.
Still, not everyone agrees the spying revelations are having a salutary financial effect. "This is going to put U.S. companies at a competitive disadvantage, because people will believe that U.S. companies lack the ability to protect their customers—and people will suspect that U.S. companies may feel compelled to lie to their customers about security," writes computer security researcher Ed Felten, professor of computer science at Princeton University. Forbes's Kashmir Hill provides dire predictions from security expert Bruce Schneier, Forrester Research, and others.
And even Reuters has reservations:
Some think it's just a matter of time, however, before U.S. industry suffers significantly.
"Industry is still in denial," said Caspar Bowden, once the chief privacy officer at Microsoft and now an independent researcher and privacy advocate in Europe. "It's like Wile E. Coyote running over the cliff, his legs are still turning but he hasn't started falling yet."
Even if spying isn't hurting companies financially, that doesn't make it right. It's a civil rights issue -- the Constitution requires warrants to execute searches on people's papers, and digital information certainly counts as papers here in the 21st Century.
Financial harm can be an effective argument against spying, at first. But it's liable to backfire if the warnings prove to be unfounded.
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— Mitch Wagner , Editor in Chief, Internet Evolution