Edward Snowden’s Revelations Are Seriously Damaging U.S. Tech Firms

Edward Snowden

The nonprofit New America Foundation released a new report this week that summarizes the impact of Edward Snowden’s NSA revelation on U.S. tech firms.

Within weeks of the first NSA revelation last year, companies like Dropbox and Amazon Web Services reported immediate drops in their sales, the report said. Citing a previous report, it said the NSA’s PRISM program could cost cloud-computing companies from $US22 billion to $US180 billion over the next there years.

“This erosion in trust threatens to do the most immediate damage to the cloud computing industry, which would lose billions of dollars in the next three to five years as a result,” it said.

In particular, U.S. tech firms are being severely hit in overseas markets, the report said. Companies such as Cisco, Qualcomm, IBM, Microsoft, and HP have all reported declines in sales in China following the NSA revelations. In fact, according to The Wall Street Journal, Cisco said it’s expecting roughly a 10% loss in quarterly revenue because of the “Snowden effect.” A web-hosting company called Servint reportedly lost more than half of its overseas clients following the revelation.

American firms are also losing the trust of foreign governments because of this. The German government said it would end its contract with Verizon last month, while Brazil picked Swedish firm Saab over Boeing for a deal to replace its fighter jets, according to the report. It said more and more foreign competitors are benefiting from the perceived image of being “NSA-proof” or “safer” than U.S. firms.

As a result, countries like Germany, Brazil, and India are close to enacting a new law that would require companies to use local data centres. For example, German Chancellor Angela Merkel, after refusing to visit the U.S. for months after the NSA disclosures, has called for data localisation laws. Brazil and India are proposing IT companies to either set up or keep their data centres within local boundaries, while Greece, Brunei, and Vietnam are following suit with similar measures, the report said.

All of this could slow the growth of the U.S. tech industry by as much as 4% and seriously undermine America’s credibility around the world, the report concluded.