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Cloud Computing: Federal Surveillance Actions Threaten US Cloud Vendors
The US Cloud Computing industry stands to lose up to $35 billion over the next three years as a result of revelations about the NSA PRISM program, estimates the Washington, D.C.-based think-tank Information Technology and Innovation Foundation (ITIF). Estimates of the total global value of the cloud computing business had expected to be about $207 billion by the end of 2016 with about half of that market belonging to US businesses.
The report, written by Daniel Castro, notes that “the impact of Prism on U.S. companies may be particularly acute because cloud computing is a rapidly growing industry… While much of this projected growth was until recently up for grabs by U.S. companies, the disclosures of the NSA’s electronic surveillance may fundamentally alter the market dynamics. Rival countries have noted this opportunity and will try to exploit it. One tactic they used before the PRISM disclosures was to stoke fear and uncertainty about the USA PATROIT Act to argue that European businesses should store data locally to protect domestic data from the U.S. government.”
Frank Gillett, an analyst at Forrester Research, said that “I’d be surprised at anything of that magnitude. Those who were already concerned about the U.S. Patriot Act and other types of legal authorities have already avoided the United States, anyway. For them, it wasn’t a big surprise.”
But some of the ripples coming from the PRISM revelations seem to be happening already. Secure encrypted email providers Lavabit and Silent Circle have recently shuttered their operations.
Hans-Peter Friedrich, German Interior Minister, said that “whoever fears their communications is being intercepted in any way should use services that don’t go through American servers.” Although Friedrich’s comments seem a bit hypocritical with news that Germany has a similar, although much smaller, effort for collecting intelligence run by the BND, Germany’s foreign intelligence agency. Venture capitalist Marc Andreessen told Jessica Lessin in an interview that the threat to the US cloud computing industry may be blunted if it comes to light that other governments also have PRISM-like programs.
There is at least one unintended casualty of the whole PRISM affair. The Guardian reports that in the UK, London-based Prism IT Solutions has been hit hard. Gary Smith, founder of the company, said that “we will never get to number one on a Google search for Prism again. Ten years ago we were. But after this – no.”
