U.S. online spying leak could harm Silicon Valley

June 8, 2013

By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The latest leak detailing U.S. online spying could harm Silicon Valley. The National Security Agency and the Federal Bureau of Investigation are mining data from Internet giants including Google, Facebook, Yahoo and Microsoft. The publication of some details may provide a privacy selling point for those not cooperating, like Twitter. It could also encourage other governments to engage in what might be called data nationalism.

The idea that Uncle Sam is tapping into Internet traffic isn’t new. The only surprise is the scale of the effort once it’s set out in black and white. It potentially touches millions of gigabytes every hour of email, videos, Skype conversations, and social networking posts. The so-called Prism program is targeted at people who live overseas, or Americans communicating with foreigners, although the government concedes that domestic traffic is caught up in the dragnet.

This is hardly reassuring even for domestic users, especially hot on the heels of revelations about the NSA’s collection of phone records. The effect on foreigners, though, could harm the U.S. companies that participate.

The risk is that if users care about privacy, they will seek rival services. One possible beneficiary is Twitter, which has earned a reputation for fighting to protect its customers’ data. The company is notable by its absence from a list of supposedly compliant firms in the NSA document – even though its ability to resist judicial and legislative pressure is, in reality, limited.

Users could also take their business to non-U.S. technology firms. And that’s just the start. Governments and corporations alike may rethink their Internet infrastructure. Increasing amounts of data are now held remotely, and the United States is a big conduit for data traffic originating and ending overseas. Places particularly concerned with privacy, such as Germany, may require or encourage more data to be stored and transmitted within its borders, or sanction companies that allow other government entities access to data on their citizens.

Worse, authoritarian regimes may feel vindicated in their much wider snooping. It’s a coincidence that President Barack Obama is on the defensive over online spying just as he’s due to meet Chinese President Xi Jinping and, among other things, complain about China’s hacking of U.S. targets. But it weakens Obama’s negotiating position. Silicon Valley’s big guns will be hoping they don’t suffer longer-term damage.

 

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