I’m currently reading 1913: In Search of the World Before the Great War, by Charles Emmerson. The book describes the social and political climates then existing not only in the major European countries, but also in other places around the world, ranging from Australia to Canada to China.
In his description of Jerusalem–then under control of the Ottoman Empire but with a population including residents and pilgrims from many countries–the author says:
Different countries even had their own postal services, circumventing the Ottoman telegraph service, which was widely thought to be a nest of spies reporting communications back to Constantinople.
Fast forward 100 years….In the wake of the reports concerning NSA surveillance programs, there is widespread concern..among non-Americans as well as among citizens of this country…that the American telecommunications and information-processing services may be “a nest of spies” reporting communications back to Washington…and from there, possibly, to other shadowy recipients. These concerns may have serious economic ramifications.
See, for example, Forbes–NSA Surveillance Threatens US Competitiveness:
Non-US customers of any US business will immediately evaluate their exposure to these new risks and look for alternatives. European, Canadian, and Australian tech companies will profit from this. Competitors in those regions will offer alternatives that will also draw US customers away from the compromised US services.
Washington Post–European Leaders Raise Concerns on US Surveillance
“The German business community is on high alert,” said Volker Perthes, director of the German Institute for International and Security Affairs. “It’s not just about listening in on some bearded guy from Ulm who bought a ticket to Afghanistan and makes conversation with his friends in Waziristan. . . . The suspicion in large parts of the business sector is that Americans would also be interested in our patent applications.”
Popular Mechanics–Why the NSA Prism Program Could Kill US Tech Companies:
Think for a second about just how the U.S. economy has changed in the last 40 years. While a large percentage of our economy is still based in manufacturing, some of the most ascendant U.S. companies since the 1970s have been in the information technology sector…
Let’s say you ran a business in (Japan, India, Australia, Mexico, or Brazil) that relied upon information services from a U.S. company. Don’t these revelations make using such a service a business liability?
See also Business Insider–Did Obama Just Destroy the US Internet Industry?
I don’t think these revelations, even if they are fully validated, will really “kill” US tech companies or “destroy” the US Internet industry…the headlines are a bit over the top, as headlines often are. I do believe, however, that the American information technology industries will be significantly harmed, with implications for the entire US economy…something that we really cannot afford at this particular point in time.
I think it is obvious that the US government needs to conduct anti-terrorist surveillance programs, which must encompass telecommunications networks…the idea that NSA should be abolished, as some have suggested in recent days, is to my mind very unwise. But non-Americans as well as Americans have every right to be concerned about the scope of what has apparently been going on, and the apparent lack of proper controls, and furthermore, to raise questions about how the information gathered is actually being used.
The NSA revelations must be looked at, and will be looked at, in the context of other things we know about the Obama administration’s behavior–such as the abuses conducted under the authority of the Internal Revenue Service. This is an administration that has clearly demonstrated its extreme power-lust, its disrespect for boundaries, and its disregard for the rule of law. Can anyone really be confident that the NSA data would not be abused if the minions of the Obama administration thought such misuse was in their best interests?
A question that must be asked: How many ideas, intellectual property were stolen by NSA/NSA employees and given to Crony Corporations?
Hopefully the answer is “none”…but we don’t really know, and neither do the American and non-American businesses whose intellectual property might be in play. It certainly seems within the bounds of the possible, though, that if certain Obama administration supporters within the bureaucracy believed that significant political advantage could be gained via the illicit transfer of intellectual property–say, information about an important energy innovation that could help a key Obama supporter and at the same time make the administration’s energy subsidy programs look good–then it might actually happen. If this seems impossible, consider the degree to which the Obama administration’s response to Benghazi–a matter of literal life and death, not just money–has been driven by the seeking of political advantage.
Hopefully there remains enough true professionalism and patriotism within the NSA to prevent such things…but the possibility that things are otherwise will be viewed by many as significant enough to influence technology sourcing decisions.
There has already been considerable reluctance on the part of non-US companies to employ US-based information assets such as data centers. Part of this has been due to specific privacy protection legislation, especially in Europe; part of it has been due to general concerns about information-gathering by the U.S. government. The current situation, encompassing not only the NSA reports but also the broader context of administration behavior–including the IRS matter–will greatly escalate these concerns. Companies offering “cloud” and other data-center-based services in the US will lose a certain amount of additional market share to companies operating outside the United States…moreover, even US based telecom and data center companies that do have assets outside the US will see increased reluctance to entrust sensitive data to any facility, wherever located, that is under the ownership of a US company.
Going beyond the information technology industries per se, it seems quite likely that a manufacturing company in, say, India or Germany or Ireland, which is in possession of innovative product or process ideas, will have increased concerns about forming a joint venture, or other business relationship requiring sharing of sensitive nonpublic information, with a US company.
Economist and historians have demonstrated that transparency, government impartiality, and the rule of law are keys to economic prosperity and growth. These factors are under serious attack in America today.