NSA Surveillance Could Cost Billions For US Internet Companies After Edward Snowden Revelations

Failure to reform National Security Administration spying programs revealed by Edward Snowden could be more economically taxing than previously thought, says a new study published by the Information Technology and Innovation Foundation Tuesday. The study suggests the programs could be affecting the technology sector as a whole, not just the cloud-computing sector, and that the costs could soar much higher than previously expected.

Even modest declines in cloud computing revenues from the revealed surveillance programs, according to a previous report, would cost between $21.5 billion and $35 billion by 2016. New estimates show that the toll “will likely far exceed ITIF’s initial $35 billion estimate.”

“The U.S. government’s failure to reform many of the NSA’s surveillance programs has damaged the competitiveness of the U.S. tech sector and cost it a portion of the global market share,” a summary of the report said.

Revelations by defense contractor Snowden in June 2013 exposed massive U.S. government surveillance capabilities and showed the NSA collected American phone records in bulk, and without a warrant. The bulk phone-record revelations, and many others in the same vein, including the required complacency of American telecom and Internet companies in providing the data, raised questions about the transparency of American surveillance programs and prompted outrage from privacy advocates.

The study, published this week, argues that unless the American government can vigorously reform how NSA surveillance is regulated and overseen, U.S. companies will lose contracts and, ultimately, their competitive edge in a global market as consumers around the world choose cloud computing and technology options that do not have potential ties to American surveillance programs.

The report comes amid a debate in Congress on what to do with the Patriot Act, the law that provides much of the authority for the surveillance programs. As of June 1, authority to collect American phone data en masse expired, though questions remain as to whether letting that authority expire is enough to protect privacy. Supporters of the programs argue that they provide the country with necessary capabilities to fight terrorism abroad. A further reform made the phone records collection process illegal for the government, and instead gave that responsibility to the telecom companies.

The issue has even made it onto the 2016 presidential campaign trail. As the deadline to reauthorize the bulk phone-data provisions of the Patriot Act loomed at the end of May, Republican senator and presidential candidate Rand Paul, Ky., filibustered debate on the bill and vowed to end the program. He drew criticism from many competitors, who said he was putting American security at risk.