The price of NSA surveillance for cloud providers

What: A report on the potential economic consequences of the National Security Agency’s PRISM program for the U.S. cloud computing industry, by Daniel Castro, senior analyst at the Information Technology and Innovation Foundation (ITIF)

Why: Europe is looking to cut into the dominance of American companies in supplying cloud computing services. The European Commission has called for its own technical standards and certification for cloud providers. The research firm Gartner has estimated that Western Europe could support a $47 billion per year cloud industry by 2015.

European vendors are likely, according to Daniel Castro of the ITIF, to leverage recent disclosures that American companies are participating in National Security Agency surveillance programs to their own economic benefit. Castro estimates that U.S. cloud vendors could lose between $21.5 billion and $35 billion over the next three years, a result of increased market share from global competitors.

Neelie Kroes, European Commissioner for Digital Affairs described the case this way: "If European cloud customers cannot trust the United States government, then maybe they won't trust U.S. cloud providers either. If I am right, there are multibillion-euro consequences for American companies. If I were an American cloud provider, I would be quite frustrated with my government right now."

Castro recommends that the U.S. government take steps to declassify more information about PRISM and other NSA data collection programs, and work to make transparency about data collection part of trade agreements, including the Transatlantic Trade and Partnership deal that is still being negotiated.

Verbatim: "While the reputations of U.S. cloud computing providers (even those not involved with PRISM) are unfortunately the ones being most tarnished by the NSA leaks, the reality is that most developed countries have mutual legal assistance treaties (MLATs) which allow them to access data from third parties whether or not the data is stored domestically."

Download the full report here.