PRISM harming US cloud providers' business abroad as contracts cancelled

PRISM harming US cloud providers' business abroad as contracts cancelled

Summary: Europe's digital commissioner Neelie Kroes could be right in guessing that the US government spying program PRISM could have multi-billion euro consequences for US cloud providers.

TOPICS: Cloud, Government

Leaks by former CIA contractor Edward Snowden about the US spy program PRISM has damaged international business opportunities for US cloud providers and could have an even bigger impact in the future, according to a new survey.

According to the results of a survey by the Cloud Security Alliance (CSA) of around 500 of its 48,000 members, the harm caused by revelations of the US spy program has already had an impact. The CSA's corporate membership includes most large US software, cloud and security vendors and service providers. 

Of the non-US organisations who participated, 10 percent claimed to have already cancelled a project that would have used a US-based cloud provider while 56 percent said they would be less likely to use a US cloud company in future.

A third of 220 US respondents also believed it is more difficult now to conduct business outside the US following Snowden's revelations. That said, however, 64 percent said it has had no impact.

The results follow speculation in Europe that knowledge of PRISM could likely have a massive impact on US cloud companies.   

Earlier this month the EC's digital chief Neelie Kroes warned that European customers would act "rationally" and turn away from US companies after discovering that information in their control was being shared with intelligence agencies.

"If European cloud customers cannot trust the United States government or their assurances, then maybe they won't trust US cloud providers either. That is my guess. And if I am right then there are multi-billion euro consequences for American companies," she said at the time.

Indeed, some in Europe are looking at the spy campaign as an opportunity to channel business back into Europe. Estonia's president Toomas Hendrik Ilves recently called on Europe to build "its own cloud" and offer citizens of Europe a level of privacy and security he believes does not exist with US firms.

The CSA also quizzed members about what should be done to the US Patriot Act, which enabled the PRISM secret surveillance program through the Foreign Intelligence Surveillance Act. While 41 percent believe the act should be repealed, 45 percent said they want it retained but with greater transparency and tighter monitoring.

However, an overwhelming majority at 91 percent said they wanted companies that had been subpoenaed under the Patriot Act to be able to publish summary information about the amount of responses they have made.

Topics: Cloud, Government

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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  • A correction...

    "Leaks by former CIA contractor Edward Snowden about the US spy program PRISM has damaged international business opportunities for US cloud providers and could have an even bigger impact in the future, according to a new survey."

    Sorry but... Actions by the CIA and their US corporate puppets has damaged international business opportunities for US cloud providers and could have an even bigger impact in the future,

    Snowden simply stated the truth, can't blame him for what that truth revealed.
    • I agree, but remember that

      zdnet is owned by a big media corporation, they have to defend the US government at all times.
      • No, they don't

        The U.S. media are often critical of the U.S. government, much to the annoyance of U.S. Presidents and their subordinates since 1789.
        John L. Ries
        • Look deeper, grasshopper...

          I am beginning to think that even the media's "criticism" is a method of hiding the willful and purposeful dissemination of mis-information. One more of the "oldest dirty tricks" in the book is to start a "fake fight" to draw attention away from something else.
    • Agreed, but you got 1 detail wrong

      He got his patriotic morals instilled in him with the CIA. When he was contracted by the NSA and saw that the NSA wasn't on the same moral level he "blew the whistle" and called them out on it. Yes, we can't blame him for what that truth revealed!
      Owen King
  • yes

    • You can't trust coporations.

      Government and corporate lobby have become so intertwined they are almost indistinguishable. But it's these corporate interests, and not government itself that is corrupt. The NSA spying, CISPA, the media industries, big data, and even big energy are scrambling to retain control in a digital age while manipulating markets into unstable conditions for their own gain and bogging down the world in economic chaos while they tighten the reigns.
      • Absolutely correct

        At the heart of it the US government is bought paid for and owned by corporations. It's hard better SocatesFoot without going into infinite tedious detail.
  • CIA Ethics?

    It is really insulting to the people in the NSA to say that they are at a LOWER ethical level than the CIA. Just remember, the CIA got its current ethical culture from Congress (5 elections ago) and Dick Cheney.
    • Compromised agency

      Actually, Dick Cheney and the positive faction within the CIA were at odds. The true story behind Cheney’s retaliation against the CIA by outing Valeria Plame is rich and fascinating.

      The CIA is an agency that became so compartmentalized that certain sections went rogue and gained significant power due to the fact that the sections that maintained an ethical structure were disadvantaged for that very reason.

      It has been extremely difficult but due to factors not isolated to the agency itself the white hats have begun to take back the agency. Not that this process is complete, but a fait accompli never-the-less.
  • Misleading article...

    It's not the leaks which damaged their business, but the US government running prism in the first place.
  • NSAagent86

    Has often been funny and clever in their retorts which sound like they are in defense of PRISM. They have been very much in defense of pointing out all that is wrong with this issue. Someone watches Colbert?

    In the end when a great amount of information (which is power) is in the hands of humans, it always ends badly.
  • Your story has it all backwards.

    Foreign companies no longer want to use US cloud companies because their customers don't want to be spied upon. Snowden did not hurt opportunities for these companies. The United States government did when they decided to spy on innocent people.
    • dumb remarks

      there are no innocent people
      Black Barack
  • Major Issue

    The US bar associations may weigh in at some point as this becomes a major issue with client-attorney confidentially and the government's ability to obtain confidential information protected as such.

    Likewise, the accounting associations and even IRS may have issues. A few years ago this IRS issued requirements related to transferring data over the net by firms using outsourcing services, especially offshore contractors. Part of the IRS requirements include assurances to the client that the data can not be accessed by another party or be used for a purpose other than tax compliance or consulting including taking action to assured the data is safe from collection and data mining. If moving data, it required the client to signoff and agree.

    I can see the government in the future side lining the client-cpa and client-attorney privilege of say not-for-profits in seeking out if 501 stays should be granted and other tax or Federal law matters without due process, just alleging there might be some acts coming under NSA preview. Then when discovered for another purpose seeking warrants or subpoenas to get the same information for prosecution or grand jury use while if resisted by the defendant making a case that once published to the net in any manner or purpose including storage can not expect to be privileged as the public has been given notice that the government is grabbing these transmissions. Same with medical records and many other things.

    This is not a Republican vs Democrat issue but a citizen vs government issue and we the people need to make both parties whom we elect read and actually defend our Constitutional rights and protections. In Canada, there is a or was an expectation that if a candidate did not do as announced while trying to be elected, if elected, would resign. Only recently under the current government has Canadian politicians started to emulate the US mentality of promise one thing and then renegging while saying it was not lying or breach of promise or fraud in the inducement and therefore no reason to resign. Maybe the citizens need to overturn sovereign immunity that has no legal basic in the US other than a Supreme Court decision early on and start suing politicians based on fraud in inducing vote influencing.

    As for the disclosure, I am still a might undecided but, inclined as a stick Constitutionalist, to support the disclosure as the activity of NSA appears to violate the Due Process guarantees in the Bill of Rights expressly required by the citizens and States to agree to accept the Constitution and become a country. The Constitution would not have been accepted by the States as originally written withoutthe addition of the Bill of Rights.
  • On a bright side ...

    Can't wait for NSA cloud backup service. Like "no need for any special software, your data is already backed up !"
    You can't beat that business model :-)
  • PRISM harming the Cloud provider business

    There is no question about it, big cloud data business will go down. We as a Russian high-tech company recommend our customers, use local service companies, or even better buy and use your own server and be able to disconnect it from the Internet.
    Talking about social networks, never ever use it, because you are a potential target for cyber criminals.
  • A clear overreaction by foreigners

    It is plain to see that Prism is directed against United States citizens. I imagine it's future uses will include suppressing dissent, incriminating citizens in crimes against the state, and identifying and rounding up undesirables.

    NONE of these activities should trouble foreigners.
    • Nope

      Clearly not an overreaction since foreign companies have lost business contracts and patents in the past thanks to NSA spying. You can't expect them to present their strategy and intellectual property on a silver plate.
  • This might just kill PRISM

    If anything kills PRISIM, it will be this.

    Not the principle of having the government spying on innocent Americans.
    Not the outcry from the American people about the government trampling on their rights.
    The bitching and moaning of big corporations & their multi-million dollar lobbyists over the loss of business.