[Vision2020] NSA Popping the Technology Bubble

Paul Rumelhart paul.rumelhart at gmail.com
Wed Aug 6 13:09:12 PDT 2014

An estimated $180B in lost revenues to US technology firms, with more on
the way.  Thank you, NSA.



NSA Popping the Technology Bubble

Wednesday, 06 Aug 2014 08:24 AM

By Patrick Watson <http://www.newsmax.com/Insiders/PatrickWatson/id-167>

Whatever you think about Edward Snowden, there is no doubt his revelations
from inside the National Security Agency (NSA) rocked the technology
sector. The consequences are still unfolding more than a year later — and a
new independent report says much more is coming.

U.S. technology leaders like Microsoft (MSFT), Cisco (CSCO) and
International Business Machines (IBM) are in a nearly impossible position.
They have to tolerate whatever secret "requests" the U.S. government makes,
both for legal reasons and because Uncle Sam is a huge customer.

At the same time, they need overseas revenue to meet their growth targets,
and it is practically impossible to convince foreign leaders that their
sensitive data is safe and secure in American hands.

Cisco, for example, openly admitted last year that Snowden was a big reason
for the firm's 10 percent revenue drop. The situation hasn't improved since
then. Qualcomm (QCOM), IBM, Microsoft and others all blame the "Snowden
effect" for lost business in China

Even some U.S. allies are turning their backs on our technology firms. The
German government cancelled a data services contract with Verizon (VZ) in
June because it no longer trusts the company to protect its network from
NSA spying.

Brazil awarded a $4.5 billion contract for fighter jets to Sweden's Saab
instead of Boeing (BA), which had fought hard to win the job.

Last week, the New America Open Technology Institute released a report
outlining the economic damage of NSA spying. They make an important point
that many observers overlook. The *perception* that U.S. companies
cooperate with the NSA is just as important as the reality.

Whether these companies knew what NSA was doing or cooperated really
doesn't matter. What matters is that a good portion of the world is rightly
suspicious of them. Regaining the lost trust will take years, even decades.

Meanwhile, foreign competitors wasted no time exploiting this new perception
In some cases, their own governments are pushing them along with "data
localization" requirements. Brazil, Germany, Russia, India, Greece and
others are moving to require private data stay within their borders.

The once-open Internet is fragmenting into smaller pieces that cannot
operate with the global scale U.S. leaders envisioned. Our government's
insane drive to penetrate every network in the world is making the world
slam the door in our face.

One could argue that this is a small cost if it protects the United States
from terrorism. We can't know if it does or not. We can know that the
direct costs to the U.S. economy are enormous and growing. The technology
sector is our crown jewel — and now most of the world is looking elsewhere.

The result will be slower growth for U.S. tech companies, especially the
cloud-computing segment. Some estimates peg the amount of lost revenue at
as much as $180 billion during the next three years.

The NSA might be good enough to find the proverbial needle in a haystack.
Unfortunately, it looks like they will use it to pop our own homegrown
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