Snowden, snooping and business effects

The Edward Snowden revelations are about two years old. The initial furor has died down a bit, and people have had time to digest the ramifications. One of the concerns voiced by U.S. tech leaders in the wake of the scandal was that U.S. tech companies might be placed at a competitive disadvantage because of their cooperation (or perceived cooperation) with U.S. Government snooping.

The immediate market and political fallout was definitely negative for U.S. tech companies. Various nations immediately started to draft legislation that would bar U.S. companies from government contracts, or favor non-U.S. companies. Others countries passed laws requiring U.S.-based tech companies to guarantee that data would be protected from U.S. government surveillance. Some foreign companies even cancelled plans to work with U.S. tech companies.

Tech leaders speak out

In response to the uproar, U.S. tech leaders asked Congress to strengthen the law, and to protect consumers and companies from snooping. Tech leaders are also urging President Obama to reject any new proposals from government or law enforcement that would seek to weaken encryption standards by allowing a backdoor for government agencies. As cybersecurity expert Bruce Schneier explains, “The problem with that is that requiring technologies to be less encrypted and less secure doesn’t benefit only the FBI or the NSA.” In other words, such weakened standards increase the risk of data theft and corporate espionage conducted by private parties and non-U.S. governments. Such weakened encryptions standards would also weaken the competitiveness of U.S. tech offerings.

One tactic that some U.S. tech companies use to shield foreign users is to host the data in foreign data centers. But as Microsoft found out last year, that strategy is now under threat. Microsoft lost a case in which it was ordered to turn over user data hosted in a foreign data center. Microsoft plans to appeal the ruling, but at the time this blog post was written, I have been unable to find an update on the case.

The furor has died down a bit in the last year, but it continues to simmer. The growth of cloud computing, the Internet of things and mobile computing means that cybersecurity, cyberwarfare and data theft will grow as concerns. Governments will legislate, consumers will choose and corporations will strategize to protect their data. Technology companies that can demonstrate a commitment to customer data security and privacy will gain a competitive advantage.

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