Thread: Fears over NSA surveillance revelations endanger US cloud computing industry

Fears over NSA surveillance revelations endanger US cloud computing industry

Companies say they could lose billions as customers become wary about their data being turned over to US authorities
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• Charles Arthur, technology editor
• theguardian.com, Thursday 8 August 2013 13.16 EDT

Some UK and European businesses are reluctant to trust US organisations with their data. Photograph: Adam Gault / Alamy

American technology businesses fear they could lose between $21.5bn and $35bn in cloud computing contracts worldwide over the next three years, as part of the fallout from the NSA revelations.
Some US companies said they have already lost business, while UK rivals said that UK and European businesses are increasingly wary of trusting their data to American organisations, which might have to turn it over secretly to the National Security Agency, its government surveillance organisation.
One British executive, Simon Wardley at the Leading Edge Forum thinktank, celebrated the publication of the information about the NSA's spying and its Prism data collection program: "Do I like Prism ... yes, and god bless America and the NSA for handing this golden opportunity to us," he wrote on his blog. "Do I think we should be prepared to go the whole hog, ban US services and create a €100bn investment fund for small tech startups in Europe to boost the market ... oh yes, without hesitation."
A survey by the US-based Cloud Security Alliance, quoted by the Information Technology & Innovation Foundation (ITIF) found that American companies which offer file storage and computing in cloud systems – so they can be stored and accessed anywhere in the world – are gloomy about the effects of the Guardian's revelations of the extent of US government snooping and data gathering through projects such as Prism and Xkeyscore.
Daniel Castro, author of the ITIF survey, said that it seemed reasonable to suggest that US cloud businesses could lose between 10% and 20% of the overseas market to rivals.
The effect has already been felt, Castro said. The ITIF survey found that of those outside the US, 10% had cancelled a project with a US-based cloud computing provider, and 56% would be "less likely" to use a US-based cloud computing service.
Of those surveyed inside the US, 36% said that the NSA leaks had "made it more difficult" for them to do business outside the US.
Scott Fletcher, chairman of UK-based ANS Group, said: "People in the UK have been reticent for a while about putting data into the US because of the Patriot Act, which means the government there can pretty much get access to everything. Prism has put into peoples' minds that there might be co-operation in the UK with that." The Guardian revealed the extent to which the UK spy centre GCHQ and the NSA swap data earlier in August.
"People talk to us and want their own private cloud service, because they know we don't have that sort of relationship with the government," Fletcher said. "They want all the services to be based in the UK, rather than using Google or Amazon Web Services."
The US government has struggled to respond to the series of revelations in the Guardian about the extent of the NSA's oversight of data, which travels into the US. Prism allows it to target details about individuals residing outside the US; the NSA claims that it has "direct access" to data from Google and Microsoft, among others, who are both also major cloud computing providers. (The two companies have denied that the NSA has direct access but said that they allow "lawful" transmission of data to it.) Xkeyscore allows the NSA to drill down to details about individuals almost anywhere on the internet.
The potential size of the cloud computing market globally is estimated at $207bn by 2016, of which more than half will be outside the US.
But not every cloud provider in the UK has benefited. Gary Smith, 33, the founder of London-based Prism Total IT Solutions, said gloomily: "We will never get to number one on a Google search for Prism again. Ten years ago we were. But after this – no."
• This article was amended on 9 August 2013 to clarify the provenance of the ITIF survey.

NSA releases documents on data collection programs, says its systems monitor 1.6% of the world's Internet traffic.