NSM PRISM et al: killing US-based cloud suppliers

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Wolf Richter: NSA Pricked The “Cloud” Bubble For US Tech Companies

What we thought had been encrypted and secured on US servers, protected by trustworthy American corporations, has been made accessible, as we now know from the Snowden leaks, not only to companies that are willing to pay for it, but also to the NSA, other members of the Intelligence Community, government agencies in the US, state and local law enforcement agencies, as well as allied foreign governments. Made possible by formerly secret provisions in the Patriot Act and the Foreign Intelligence Surveillance Act.


But there is a price to pay. Tens of billions of dollars, it turns out. The reactions by foreign companies and governments to these revelations have “an immediate and lasting impact” on the US cloud computing industry, determined the Information Technology & Innovation Foundation. In its report, the ITIF estimated that the global market for cloud providers will be $148.8 billion in 2014, $160 billion in 2015, and $207 billion in 2016 – double the size of 2012, and more than four times the size of 2009. Companies in Europe and Asia are trying to grab market share, often with generous help from their governments. Now they have new ammunition.

In a survey conducted after the Snowden leaks, 10% of the foreign companies using cloud computing services said they’d already cancelled a project with a US cloud provider and 56% said they’d be less likely to use US-based providers. Conversely, among US stakeholders in the cloud sector, 36% said that the NSA leaks would make it more difficult doing business outside the US. The report estimated that if US cloud companies lose between 10% and 20% of their foreign business over three years, it will cost them between $21.5 billion to $35 billion.

But the report cautions it could get much more expensive “if foreign governments enact protectionist trade barriers that effectively cut out US providers.” In Europe, momentum in that direction is growing.

German Federal Data Protection commissioners threatened with new bureaucratic hurdles. Interior Minister Hans-Peter Friedrich announced that “whoever fears their communication is being intercepted in any way should use services that don’t go through American servers.” And Justice Minister Jörg-Uwe Hahn called for an outright boycott of US companies.

Similar maneuvering is underway in France. “It’s extremely important to have the governments of Europe take care of this issue,” explained Jean-Francois Audenard, the cloud security advisor to France Telecom; “if all the data of enterprises were going to be under the control of the US, it’s not really good for the future of the European people.”

Even before the leaks, the European Commission was trying to stymy US-based cloud providers by using data security as a fig leaf for compe ive considerations. It’s “about building a new industry, and better competing against the United States in particular,” its European Cloud Partnership pointed out. Now its focus has sharpened.

Dollars are already shifting. Mateo Meier, CEO of Artmotion, Switzerland’s largest hosting company, said that revenues jumped 45% since the Snowden leaks. Global companies like IBM and Oracle, that are staking their revenue-growth hopes on the cloud, will feel – or are already feeling – the pressure. And once again, they might have to put their most creative minds to work on finding new excuses for their revenues debacles.


http://www.nakedcapitalism.com/2013/...+capitalism%29

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Eye on surveillance: France's PRISM, EU's concerns


http://news.cnet.com/8301-13578_3-57...-eus-concerns/