US tech sector likely to take bigger hit from NSA surveillance than estimated

10 Jun 2015


Silicon Valley is likey take a bigger hit over claims it was working with US intelligence agencies

According to the Information Technology and Innovation Foundation (ITIF)'s new report yesterday, the tech industry was likely to "far exceed" the group's initial estimate of losing up to $35 billion.

This was partly due to little having been done to address global concerns two years after leaks revealed the PRISM surveillance programme, the ITIF said.

According to ITIF, a non-profit group focused on tech issues, the matters were compounded by politicians not adopting new laws to check government surveillance, which "sacrifices robust competitiveness of the US tech sector for vague and unconvincing promises of improved national security."  The report is authored by Daniel Castro, vice president ITIF and Alan McQuinn research assistant ITIF.

The report comes after a series of meagre earnings reports and lower-than-expected sales figures reports from major tech and cloud providers over the past year, which showed customers concerned about their own users' data being accessed by the National Security Agency, were turning to local companies in Europe and elsewhere to store their data.

''We've opened floodgates to huge loss because we haven't changed anything about US surveillance policy,'' said Castro.

Former NSA contractor Edward Snowden's revelations had led to a marketing bonanza for European software and service providers looking to compete with hard-charging US rivals such as Amazon and Microsoft, a blog in The Wall Street Journal said.

Around two years back, Oliver Dehning, the chief executive of security software maker antispameuropeGmbH described the National Security Agency spying revelations a ''present from heaven,'' adding that it was ''an opportunity to strike back and protect our home market.''

The blog quoted Steve Phillips, CIO of Avnet an electronics distributor with $28 billion in revenue last year as saying, ''Data protection has always been a sensitive topic, but it is even more so following Edward Snowden's monitoring revelations.''

The issue was likely influence the 2016 presidential race as candidates seeking donations faced questions from US executives regarding surveillance and trade policy, according to Castro.

The blog reported Jon Atkin a managing director with RBC Capital Markets, LLC, as saying already for US companies, cloud computing build-outs had become ''more decentralized,'' than they otherwise would have been, adding to operations costs. Amazon, for instance, was building new facilities in Frankfurt and Microsoft was building new facilities in Vienna.

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