The law of unintended consequences reached Silicon Valley this summer. Thanks to Edward Snowden, the whole world knows not to trust U.S. Internet companies with private data. The cost will likely be huge.
Last month, I said the economic consequences of National Security Agency data collection
could be as significant as the lost privacy. Now we have more evidence.
Item 1: A report from the Information Technology & Innovation Foundation estimates U.S. cloud providers could lose as much as $35 billion in revenue over the next three years. That's real money, gone because of worries about the National Security Agency's PRISM program.
Item 2: In a global survey sponsored by the Cloud Security Alliance, more than half of corporate technology professionals said PRISM makes them less likely to use a U.S.-based Internet company. About 10 percent said they had already cancelled projects with American technology firms.
Item 3: German Interior Minister Hans-Peter Friedrich suggested fearful citizens "should use services that don't go through American servers." German Justice Minister Jorg-Uwe Hahn called for an outright boycott of U.S. companies.
Item 4: Jean-Francois Audenard, the cloud security advisor to France Telecom, said allowing U.S. enterprises to control data is "not really good for the future of the European people."
Item 5: Executives at Switzerland's largest web hosting company, Artmotion, said revenues shot up 45 percent since the Snowden disclosures. The new business probably came at the expense of U.S. companies like Microsoft (MSFT) and Amazon (AMZN).
This is only the beginning — and U.S. tech leaders know it. Voluntary or not, cooperation with the intelligence agencies seriously hinders their global growth plans ... hence their suddenly increased interest in Washington affairs.
Last Thursday, top executives from AT&T (T), Google (GOOG) and others had a private meeting with President Obama at the White House. The next day, the president announced some "reform" proposals at a press conference.
Obama may have done the tech companies more harm than good. The president's preposterous claim to want an "open debate" about surveillance reeked of desperation. His credibility erodes with each additional lie. No one believes Obama wants surveillance reform. What he wants is to make the issue go away.
You're too late, Mr. President. Too late for U.S. cloud technology companies, too. The whole world just took the red pills. They see through your clouds.
Do they see everything? Probably not ... but they've seen enough.
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