How the NSA leaks could affect the US cloud computing industry
News of the National Security Agency's data collection and surveillance programs made public ongoing privacy debates in the Foreign Intelligence Surveillance Court, inciting a backlash against the US government both domestically and internationally.聽
Concerns about who has access to troves of online data extends from foreign negotiations to business deals: If the FISA court can issue a "national security letter" to gain access to US-based Internet companies鈥� servers, any foreign company鈥檚 data stored on these servers could be accessed by the US government.
A recent from the Information Technology and Innovation Foundation estimates that the United States鈥� multibillion-dollar US cloud computing industry stands to lose anywhere from $22 to $35 billion over the next three years because of the NSA revelations.
鈥淚f European cloud customers cannot trust the United States government, then maybe they won鈥檛 trust US cloud providers either,鈥� said European Commissioner for Digital Affairs Neelie Kroes in an interview with聽聽in July. 鈥淚f I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now."
Industry shifts since the NSA leaks in early June support Mr. Kroes鈥� argument. Amazon Web Services, widely acknowledged as the global market leader in cloud storage, cut some of its prices by 80 percent in July to remain competitive. The writing on the walls seems clear: The NSA leaks will hurt US cloud companies. But to peg an industry shift to June 2013 would overlook a larger trend that has been taking place in the industry since 2001.
鈥淓nterprises were worried about government snooping well before the NSA leaks,鈥� writes Camille Mendler, principle analyst with the Informa group in an e-mail to the Monitor. 鈥淭he US government gets most [of the] attention because of the implied powers of the Patriot Act, let alone issues around NSA [and] Prism.鈥�
The concept of cloud computing, or storing massive amounts of data in computers, dates back to the 1950s, though the feasibility of maintaining servers with vast amounts of information did not really take off until the early 2000s with the spread of the Internet. In 2006, was one of the first companies to offer large amounts of cloud storage to clients. Within several years, the industry had taken off. Data was increasingly stored in electronic clouds, rather than company hard drives. 聽
In 2011, Germany鈥檚 Deutsche Telekom and other telecommunications companies began promoting cloud-computing offerings as a way for businesses to 鈥渙utsource their data centers,鈥� according to a Bloomberg from the time.聽
Having all corporate data under the stewardship of US companies would not really be 鈥済ood for the future of the European people,鈥� the cloud security advisor to France Telecom, in January 2012. It is 鈥渆xtremely important to have the governments of Europe take care of this issue."
Before details of the Prism program were known, rivals of large US cloud computing companies could only point to the possibility of government surveillance,聽rather than concrete incidences of the US government accessing user data from Internet providers. The Prism programs confirmed suspicions that data in US servers could be accessed by the US government without a client鈥檚 knowledge via US-based Internet servers.
鈥淲hoever fears their communication is being intercepted in any way should use services that don鈥檛 go through American servers,鈥� and should stop using American companies such as Google and Facebook, German Interior Minister Hans-Peter Fredrich in July.
And according to the聽Information Technology and Innovation Foundation, any market edge within the聽rapidly growing cloud industry, such as the promise of server security away from the US government鈥檚 data collection program, could be a game changer for young cloud companies.聽
However, some in the cloud computing industry think that the NSA leaks could signal a shift away from large companies with data storage offerings, such Google, Yahoo, and IBM, commonly referred to as 鈥減ublic鈥� companies, compared to less consumer-driven 鈥減rivate鈥� data storage companies.
If you use one of these data storage companies, even a foreign data firm, 鈥測ou should have the expectation that data ... is being fed to government agencies,鈥� says Charles Weaver, chief executive officer of MSP Alliance, an international group of cloud and data service providers that advises small software and data storage companies.
This month, President Obama hosted Apple chief executive officer Tim Cook, AT&T CEO Randall Stephenson, and Google computer scientist Vint Cerf to discuss government surveillance. It is this kind of close relationship between large Internet companies and the government that Mr. Weaver finds concerning and says does not exist between smaller data companies and federal governments.
Mr. Weaver says that it is harder to get information from a smaller cloud storage company. Seizure of this data will be noticed, he says. It鈥檚 the same thing as with small e-mail service providers such as Edward Snowden鈥檚 provider Lavabit. It shut down rather than surrender consumer data. But, Google isn鈥檛 about to shut down because of a data request, says Weaver.
Earlier this month, Google announced the company鈥檚 intentions to encrypt all data on its cloud platform, typically used by businesses, rather than individuals. Google, however, will still have access to the encryption codes, making arguably them just as susceptible to be requested by national security letters.
