The Cloud

U.S. Digital Surveillance Hurting Tech Sector

Tech industry group warns that economic impact of U.S. surveillance will likely far exceed $35 billion.
Katie Kuehner-HebertJune 10, 2015

The economic impact of digital surveillance practices on the U.S. technology sector will likely far exceed $35 billion as the government continues to fail to strengthen information security, a coalition of tech companies warn in a new report.

The Information Technology and Innovation Foundation, funded by Intel, Microsoft, and others, estimated in 2013 that even a modest drop in the expected foreign market share caused by concerns about U.S. surveillance could cost domestic cloud computing companies between $21.5 billion and $35 billion by 2016.

“Since then, it has become clear that the U.S. tech industry as a whole, not just the cloud computing sector, has underperformed as a result” of the revelations of National Security Agency whistleblower Edward Snowden, ITIF said in a report released Tuesday.

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“Therefore, the economic impact of U.S. surveillance practices will likely far exceed ITIF’s initial $35 billion estimate,” it concluded.

The report faults U.S. lawmakers for fanning “the flames of discontent by championing weak information security practices.” Other countries are now implementing protectionist policies specifically targeting information technology, using anger over U.S. government surveillance as a cover, ITIF contends.

“The combined result is a set of policies both at home and abroad that sacrifices robust competitiveness of the U.S. tech sector for vague and unconvincing promises of improved national security,” the group wrote.

According to The Wall Street Journal, Snowden’s revelations have led to “a marketing bonanza for European software and service providers looking to compete with hard-charging U.S. rivals” such as Amazon and Microsoft.

“We’ve opened floodgates to huge loss because we haven’t changed anything about U.S. surveillance policy,” Daniel Castro, vice president of ITIF, told the WSJ.

ITIF recommends, among other things, that U.S. policymakers increase transparency about U.S. surveillance activities both at home and abroad, strengthen information security by opposing any government efforts to weaken encryption, and work to establish international legal standards for government access to data.

“When historians write about this period in U.S. history it could very well be that one of the themes will be how the United States lost its global technology leadership to other nations,” the report warns.