NSA spying may cost US companies over $35bn & do lasting harm to economy

Reuters/Jonathan Ernst
The US government’s failure to reform the NSA spying programs and its opposition to encryption could cost tech companies over $35 billion. They are losing money as non-Americans are shunning US businesses and erecting trade barriers.

The warning comes following a newly released report by the Information Technology & Innovation Foundation (ITIF). The technology watchdog first warned about the potential fallout from the Snowden revelations in 2013, when it estimated the US cloud computing sector could lose anywhere between $21 billion and $35 billion.

The report, which was released on Tuesday, says the entire US tech industry has suffered and the actual economic losses will “likely far exceed” the $35 billion estimate.

Though recent congressional battles have been about the Section 215 bulk collection, the ITIF says there have been no discussions concerning programs such as PRISM, which “allows for warrantless access to private-user data on popular online services both in the United States and abroad.” There has also been a lack of debate over the NSA’s program to subvert encryption standards in the US and overseas, dubbed “Bullrun.”

As a result, policies at home and abroad sacrifice the “robust competitiveness of the US tech sector for vague and unconvincing promises of improved national security,” the report’s authors, Daniel Castro and Alan McQuinn wrote.

Since Edward Snowden’s disclosure of the NSA’s spying programs in 2013, foreign businesses, governments and private citizens have repeatedly told pollsters they would be reluctant to use American technology products, from cloud storage to mobile devices.

Policy decisions by the US intelligence community have reverberated throughout the global economy,” the authors argue, “putting intelligence gathering first and foremost” while doing little to address the backlash against US tech companies.

READ MORE: Leave our encryption alone: Top tech firms, groups appeal to White House

Foreign governments have responded by adopting protectionist policies locking out US vendors, and citing fears of digital surveillance to demand source codes from service providers. As a result, many US companies have embraced strong encryption for their mobile devices and cloud services, and have begun to oppose government initiatives to subvert or ban encryption.

Castro and McQuinn argue these trends will hurt the entire US economy in the long haul. The ITIF urges policymakers to increase transparency concerning US surveillance and oppose initiatives to weaken encryption or introduce “back doors” in software, as demanded by law enforcement and intelligence communities.

To address protectionism, the foundation advocates working with foreign governments to create an international legal standard for government access to data, strengthening mutual legal assistance treaties, and conclude “trade agreements like the Trans Pacific Partnership that ban digital protectionism, and pressure nations that seek to erect protectionist barriers to abandon those efforts.”

When historians write about this period in US 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. And clearly one of the factors they would point to is the long-standing privileging of US national security interests over US industrial and commercial interests when it comes to US foreign policy,” write Castro and McQuinn.