Obama, NSA Surveillance, and the Future of the American Information Technology Industry

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?

Here’s Special Operations Speaks, a group of retired American special forces warriors, on their Facebook page:

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.








14 thoughts on “Obama, NSA Surveillance, and the Future of the American Information Technology Industry”

  1. QOTD – “Beware of geeks bearing gifts.” When they said Don’t Be Evil, they didn’t add they were capturing it.

  2. It might be more tolerable if they had ever caught one of the terrorists. They seem to have avoided all attempts to warn, by the father of the “Underwear Bomber”, the Russians, the people who ran the flight school in Arizona, the British in Libya.

    The people who were doing all the data collection were so busy working on the Obama campaign they didn’t have time for secondary tasks like national security.

    The reason why we have the TSA is because Democrats wanted to have another unionized work force of federal employees.

  3. Most folks in the U.S. are not aware of it, but the Chinese government launched a sustained media campaign against Apple in April. There were four or five weeks in a row where a week-end did not go by without a prime-time special report on Apple’s corruption, an announcement from officials that Apple had broken law x or law z, or a special editorial in the People’s Daily slamming Apple for distributing pornography or something else. It is all very reminiscent of the attacks that landed on Google before Google was kicked out of the country.

    With Google it seemed fairly obvious why – just a few months before Google disclosed that China had hacked its servers in order to access e-mails accounts of dissidents. With Apple things are a lot harder to read. There really isn’t a reason for this new found hostility, save perhaps a realization on China’s part that Apple is too entwined with the U.S. government or just too independent to further China’s national interest.

    A few weeks ago that might have seemed kind of silly. Not so now. These PRISM revelations justify that reasoning, don’t they? It makes one wonder what the Chinese know that we do not.

    How my Chinese friends have crooned. Just chatted with one two days ago – she was quite blunt. “Everybody gets upset when China spies on people, but we are not the only ones who do it. America is just as bad. We have always known that. Now you do too.”

  4. With the revelation that the DOJ does not hesitate to lie in order to secure a court order for information (Rosen) and that FISA judges seem remarkably compliant ( >11,000 requests with fewer than .03% turned down), is it any wonder that citizens of the USA are concerned? Responses from government officials – Trust us, we have your best interests at heart, but we can’t tell you anything, its classified. It isn’t only the current administration, it is the bureaucracy tasked with securing the information- corrupt, self-satisfied and unconstrained by any recognizable sense of duty to fellow citizens.

  5. George Will writes about Lois Lerner of the IRS and her apparent involvement in the politicization of that organization, and the connection to the NSA issue:

    “The case for the National Security Agency’s gathering of metadata is: America is threatened not by a nation but by a network, dispersed and largely invisible until made visible by connecting dots. The network cannot help but leave, as we all do daily, a digital trail of cellphone, credit card and Internet uses. The dots are in such data; algorithms connect them…

    The case against the NSA is: Lois Lerner and others of her ilk.

    Government requires trust. Government by progressives, however, demands such inordinate amounts of trust that the demand itself should provoke distrust. Progressivism can be distilled into two words: “Trust us.” The antecedent of the pronoun is: The wise, disinterested experts through whom the vast powers of the regulatory state’s executive branch will deliver progress for our own good, as the executive branch understands this, whether or not we understand it. Lois Lerner is the scowling face of this state, which has earned Americans’ distrust.

    Lois Lerner, it is prudent to assume, is one among thousands like her who infest the regulatory state. She is not just a bureaucratic bully and a slithering partisan. Now she also is a national security problem because she is contributing to a comprehensive distrust of government.”


  6. David nails it. I don’t have a problem with NSA snooping or mining. We’re at war. I do have a problem with Lois Lerner’s who abuse their power.

  7. “With Apple things are a lot harder to read”

    Hey T.,

    I’m sure there are a lot of instances of pots calling kettles black.

    Last month Apple renegotiated its supplier contracts and is now diversifying away from their main contractor, Foxconn.
    There were a lot of reports that they were going to relocate manufacturing to the US, although that has cooled off lately.

    You’ve undoubtedly heard and read about Foxconn’s challenging labor conditions and recent bribery problems.
    It could be that the negotiations were playing out in the press, and the volleys were being fired back at Apple in the form of those negative reports.

    Regarding government trust issues, the faith in our system and institutions now risks being eroded beyond repair because of the diminishment of the legislative branch.

    Congress has already lost much of their constitutional power such as the power to declare war and the power “to make all laws which shall be necessary and proper…” due to executive orders.

    If they continue to allow systemic perjury during congressional hearings they risk becoming completely irrelevant. They’ll turn into a ceremonial body like the UN or Roman Senate.

  8. It never ceases to amuse me that the USA is excoriated and denounced for activities that all countries perform and which, when similar Russian, Chinese, and other European countries’ similar activities are exposed, at best the victims shrug, because, after all, normal is normal, and what can be expected of Socialists?

    Again the American people have constructed an instrument of tyranny. I’m sure with the NSA only trustworthy people who will never abuse the powers of their offices will conduct the NSA’s surveillance. Such powers, like the power to tax and regulate, will never be abused. Hasn’t the lack of corruption in the IRS proved that powerful bureaucracies are the friends of liberty?

    Modernity, the modern state, the technocratic state, requires tyranny and license to survive.

    I wonder: was the software which searched for the human networks and human connections among the communications metadata transferred from the NSA to other agencies where is was used to make expose networks using other data? Was it transferred to private companies?

    The Obama campaign was praised in the last election for its computer and networking savvy? Were they using the NSA’s software? If not, why not?

    If you construct the instruments of tyranny to defend your liberty, you will have neither victory nor liberty.

    I was aware of the PRC campaign against Apple, and I wondered if it had something to do with the announcement that the new desktop computer would be manufactured in the USA.

  9. “Everybody gets upset when China spies on people, but we are not the only ones who do it. America is just as bad. We have always known that. Now you do too.”

    This is a lie. Disprove my accusation: show me that a similar proportion, compared to America, of the Chinese media, Chinese politicians, and Chinese people publicly deplore their government spying. Can’t be done. Because the quoted statement is demonstrably false.

    Soon shall we learn the true price of manufacturing ‘black box’ hardware (routers, switches, etc.) in a totalitarian polity.

  10. As a case study of what government intervention can do to an industry, consider the US nuclear power industry.

    There can be little doubt that Jimmy Carter’s restrictions on US nuclear power exports helped emasculate the US nuclear industry. They have certainly made it much more difficult to export to ALL countries and impossible to many. This has opened the door for foreign competitors and weakened domestic companies.

    Like so much of the Obama Administration’s policy, destruction of US economic vitality is a feature and not a bug.

  11. -Data mining may be acceptable if it works and the govt doesn’t abuse it.

    -Data mining isn’t acceptable if it’s an excuse to inventory information for political purposes (e.g., “John Smith is a problem for us. What do we have on him?”). There’s enough circumstantial evidence to be concerned that the Obama administration is misusing data mining for political purposes.

    -This lack of trust in the Administration’s motives and behavior is extremely corrosive to the functioning of our political institutions. The proximal solution to this lack of trust is for the Administration to behave in ways that encourage trust. The solution is not, contra the Administration, for Americans to force themselves to trust the Administration. The ultimate solution is to reduce the size and scope of govt substantially.

    -Even if it’s implemented honestly and conscientiously, data mining probably leads to too many false positives to be relied on, absent other techniques such as profiling.

    -Profiling is an effective means of sorting people who are more likely to be terrorists from people who are unlikely to be terrorists. Yet we go out of our way not to profile overtly. This is a scandal of omission.

  12. Apple is using a Singapore supplier on the Mac Pro.

    and they don’t believe in coincidences

    The plan before was for Foxconn to somehow expand in the US. I’m not sure how their workplace culture would have translated over here, but thankfully I guess we won’t have to find out now.

  13. “The proximal solution to this lack of trust is for the Administration to behave in ways that encourage trust”

    Not quite right. The proximal solution is for the two competing branches of government to discipline the other. To hope for any administration to be restrained and correct in its behavior, while desirable in and of itself, is to wish to be governed by ‘good people’ (or ‘trusted third parties’), but as the scandals of FDR and JFK show, appearances were deceiving. The FDR administration, in particular, was run by communist traitors who privileged the USSR over the USA every time, to what degree still isn’t clear.

    The American people must do more than vote the best it can, then hope. To build trust in Congress, Congress must expose malefactors, hold them in contempt, and prosecute them when possible. The end result will be increased trust in all branches of government. (In short, most of the Obama administration must be imprisoned.)

    “The ultimate solution is to reduce the size and scope of govt substantially.”

    True, but beside the point for non-domestic concerns. The need for the IRS can vanish if the government lives within its means and proper functions. The need for a substantial military and spy apparatus will not decline as long as our enemies have universal scope.

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