Revelations about data gathering by the National Security Administration (NSA) may actually damage the ability of American companies to conduct business abroad. While Google, Facebook and other high profile firms are pressing the U.S. government to allow them to explain their involvement, other high tech companies should also prepare for a backlash.
The need for mutual trust and respect is a common theme in Europe lately. Neelie Kroes, VP of the European Commission responsible for the Digital Agenda, called on the U.S. to be more transparent with Europeans about the NSA data collection programs. “If the US government doesn’t choose this course, it will undermine trust in new digital services, with the risk that users will abandon them or never join the digital ranks,” she said at an American Chamber of Commerce EU conference in Brussels June 17.
“The PRISM debate will definitely increase calls for a European cloud, with a range of possible consequences for American companies,” Kroes said, referring to NSA’s broad surveillance program that collects and stores digital data. What those consequences are hasn’t been spelled out, but with TTIP negotiations starting, it can be expected that data privacy will figure into the negotiations.
The European Cloud that Kroes mentioned may incentivize companies to keep their data in Europe, with European companies. Currently, most of the large cloud services, including Amazon and IBM, are in the U.S. although the servers themselves are located globally. In the wake of the PRISM scandal, however, American firms can expect stiff competition to develop in cloud services, while many others may refuse to migrate their IT operations to the cloud. With the stronger EU protections proposed in its many cybersecurity proposals, European companies and their information technology service providers may find a more competitive environment – and a robust option to U.S. organizations.
"Foreign users of the companies associated with PRISM, who are not protected by U.S. law, might decide to source their Internet services elsewhere,"says David P. Fidler, a fellow at IU's Center for Applied Cybersecurity Research and the James Louis Calamaras Professor of Law at the IU Maurer School of Law. Within the U.S., fears of international programs like PRISM, and the different interpretations of privacy laws internationally, have incentivized American companies for many years to keep their U.S. data on servers within the U.S., despite a cloud environment.
Reports in the German magazine der Spiegel suggest that PRISM could hinder TTIP negotiations. Data protection is likely to be added to the negotiation points – particularly since European countries reduced their own data protection at the request of the U.S. government.
The potential for backlash is particularly strong in Germany. Markus Ferber, a German member of the EU Parliament, referred to PRISM as "American-style Stasi tactics," referencing the East German secret police.
German business daily Handelsblatt, quoted in der Spiegel Jun 25 editorialized, “The surveillance regime destroys that which is referred to as America's 'soft power' – the magnetism of the ideals that the country embodies. America's superpower status is not based solely on its military might and the power of economic sanctions. Rather, it is also based on the allure of freedom and civil rights.