NSA hurting company bottom lines


While the summer’s revelations about the National Security Agency’s surveillance and data-mining programs have left many with growing fears of a surveillance state, another, more tangible cost of intrusive government may be U.S.-based data companies winning less business from spooked international customers.

The United States is a leader in the cloud computing industry, a term that primarily refers to networks that provide off-site data storage services; it’s estimated to reach $207 billion by 2016, according to a new report from the Information Technology & Innovation Foundation, a think tank based in Washington, D.C.

But, the study estimates that U.S. companies stand to lose up to 20 percent of their revenue from foreign markets, $22 billion to $35 billion over three years, as customers abroad seek other options for storing their terabytes of information, and foreign governments become nervous about all the data stored in U.S.-based servers.

In fact, a recent survey by the advocacy group Cloud Security Alliance of its membership found that 10 percent of respondents said they had already canceled dealings with U.S. providers, and 56 percent were “less likely” in the future to use a U.S.-based cloud computing service.

And, of the companies within the U.S. that were polled, 36 percent said they found the NSA leaks had made doing business more difficult.

“I don’t think that helps anyone. We do benefit from free trade and the robust competitiveness in the tech industry,” Daniel Castro, author of the report, told the Agence France-Presse news service.

We agree, and it is worrying news for an industry expected to grow by up to 100 percent within three years, while the overall information technology industry is expected to grow only by 3 percent, the report estimated.

And that growth in cloud services has already been bet on heavily by U.S. companies, as Louis Columbus, at Forbes, crunched the numbers and found that, of the $13.5 billion invested into cloud services in 2011, less than half, 41.5 percent, came from outside North America.

In all, the cloud computing industry has placed the U.S. at the innovative forefront, in both jobs and revenue, of a booming tech economy. But, as the report notes in its conclusion, “[I]t is clear that if the U.S. government continues to impede U.S. cloud computing providers, other nations are more than willing to step in to grow their own industries at the expense of U.S. businesses.”

We sincerely hope Washington takes note.

From the Orange County (Calif.) Register

 

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