U.S. Cloud Firms Suffer From NSA PRISM Program

Revelations of the NSA's massive electronic surveillance program give fuel to foreign firms and governments that warn of privacy risks of doing business with U.S. cloud service providers.

By Kenneth Corbin
Thu, July 25, 2013

CIO

cloud security, data protection, privacy
WASHINGTON -- For U.S. cloud providers, already working to beat back a wave of overseas policies they say tilt the playing field in favor of home-grown competitors, the revelations of the National Security Agency's PRISM electronic surveillance program have only made conditions in foreign markets tougher.

The media accounts of the program based on leaks by former contractor Edward Snowden have created a perception that the U.S. government has unlimited and direct access to data stored on the servers of companies like Google and Microsoft, experts said on Wednesday at a policy talk here at the Information Technology and Innovation Foundation, a D.C. think tank.

[ The NSA Security Quagmire ]

"The PRISM disclosures are damaging, and I think I'm prepared to speculate extremely damaging to commercial firms that have offered cloud and related kinds of services, and that do or would benefit from efficient cross-border data flows," says Philip Verveer, the former U.S. coordinator for international communications and information policy at the State Department.

Already, domestic cloud providers have been hampered in their overseas expansion, particularly in Europe, by a deficit of trust among businesses and consumers who worry about how their data will be handled when it resides in the cloud. The long-held suspicion that the U.S. government will be able to freely access foreign users' data under the PATRIOT Act has been fueled by foreign cloud companies and some state officials, who have pressed for cloud protectionist policies that would limit the flow of data outside the country, effectively requiring foreign providers to operate data centers locally.

Now, U.S. trade advocates see the PRISM disclosures giving fresh momentum to those protectionist policies.

"What you see is a lot of foreign officials and foreign companies sort of making hay while the sun still shines," says Jake Colvin, vice president of global trade issues at the National Foreign Trade Council. "Foreign companies are happily using PRISM as the latest series of clubs to beat U.S. companies over the head."

The effects of the PRISM disclosures have already begun to come into view. In a recent survey by the Cloud Security Alliance, a non-profit group with more than 48,000 individual members, 10 percent of officials at foreign companies said that they have cut ties with U.S. providers following the leaks, and 56 percent of foreign respondents say they are now hesitant to do business with U.S. firms.

U.S. cloud providers have acknowledged the reputational hit that they have suffered from the leaks, and firms like Google have attempted to clarify their role in the program, insisting that there is no back-door for the government to access their data, and that they only provide the government with users' information in response to a court order. Google, Microsoft and Facebook have also asked the government for permission to make public more information about the national security requests they receive from federal authorities.

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