Last week, U.S. Sen. Ron Wyden, D-Ore., hosted a forum in Silicon Valley on NSA spying as a means to drum up support for proposed reform legislation that has been stalled in the Senate.
Attended by executives from Google, Microsoft, Facebook and other tech companies, the forum found a receptive audience, as these companies are worried about their prospects of doing business abroad. A 2013 report warned that American companies could lose up to $180 billion in lost technology sales as a result of the NSA spying allegations. A report in August of last year found that American cloud computer services alone could lose up to $35 billion a year in lost overseas sales as a result of the revelations.
These estimates have turned into reality, according to the Associated Press:
A few companies, including Cisco Systems Inc. and Qualcomm Inc., have said they believe they lost some deals in China and other emerging markets because of concerns about U.S. spying. Germany did cancel a contract with Verizon this summer, citing a fear that it may provide customer phone records to the NSA. Some tech startups and telecommunications companies in France and Switzerland have claimed an increase in sales to customers who are wary of U.S. providers.
Not only are foreign companies shying away from doing business with American companies, but foreign governments are as well. According to tech executives, there are concerns that foreign governments, especially European Union member states such as Germany, may place protectionist restrictions on U.S. tech companies over the NSA’s spy programs. Such protectionist policies would break the Internet, according to Google CEO Eric Schmidt.
Among the protectionist policies that U.S. tech executives fear are requirements that all European-based data only be stored on European-based systems. The goal would be to ensure the data handling remains compliant with EU privacy protections, rather than those of the United States. In April, the European Court of Justice threw out the European Union’s similar metadata collection program.
Such mandates would require American companies to build EU-specific Internet infrastructure, based in Europe. This would cost untold amounts of money for American tech companies. The alternative would find American companies shut out of the European market. The Information Technology & Innovation Foundation has estimated U.S. tech firms could lose as much as 20 percent of their revenue to foreign companies that capitalize on the fears of U.S. spying.
There are also fears that such requirements could increase the likelihood of trade wars that spill out beyond the tech sector. This could cause massive economic damage, both domestically and globally.
The solution that Sen. Wyden would like to see enacted is passage of the USA Freedom Act, which would place strict restrictions on the NSA’s ability to conduct warrantless surveillance of Americans’ e-mail and Internet communications. The bill would also end the practice of the bulk collection of Americans’ phone records. The bill is supported by most in the tech industry and by a bipartisan coalition in Congress.
However, the House-passed version of the legislation was watered down at the request of leadership of both parties. The White House is opposed to the bill and the bill has not even made the Senate calendar. Senate Judiciary Committee Chairman Patrick Leahy, D-Vt., has proposed a substitute NSA reform bill that Wyden and others charge doesn’t go far enough.
The NSA spying program needs to be reined in for a couple of very important reasons. It is a violation of the civil liberties and the privacy of the American people. The program we’re finding has also caused damage to the American economy and may potentially damage the global economy as well. We hope that Congress will act on this issue in upcoming lame duck session after the elections.