NSA surveillance fallout may hamper AT&T's European push

The networking giant could face difficult times ahead if Europeans aren't satisfied that it won't siphon off EU-based data back to the U.S. mass surveillance machine.

Image: AT&T, via CNET

AT&T's bid to enter the European market may stumble if the networking giant cannot provide strict guarantees that European data will not leave the 28 member state bloc.

According to a Wall Street Journal report, citing European officials, the ongoing U.S. National Security Agency (NSA) surveillance scandal may put a dampener on any attempt for the American giant to enter the new market, given its past cooperation with the intelligence agency's data-collection program.

Read this

PRISM: Here's how the NSA wiretapped the Internet

The National Security Agency's "PRISM" program is able to collect, in realtime, intelligence not limited to social networks and email accounts. But the seven tech companies accused of opening 'back doors' to the spy agency could well be proven innocent.

Read More

One of the major concerns is that AT&T may be a conduit to siphon off vast amounts of European citizens' data back to the U.S., where it can be inspected and analyzed by intelligence agencies.

In 2006, privacy groups sued the networking giant after a staff technician blew the whistle on Room 641A, a secret room in a San Francisco, California, that allegedly routed Internet traffic in order for the NSA to collect data.

The case was dismissed in 2009 by a federal judge.

While AT&T has yet to make a formal bid to expand its network across the Atlantic, recent reports have suggested the company may be mulling a bid to take over a European cellular network  — either in the U.K. or in The Netherlands — as early as the first half of next year.

Europe is particularly aggrieved by the U.S. surveillance scandal. European politicians have already voted to suspend a data-sharing agreement with the U.S., which may hamper intelligence operations between the two continents, amid reports that the NSA spied on millions of European citizens, but also a number of heads of state and leaders .

However, the NSA surveillance scandal notwithstanding, any U.S. takeover of a European firm will not happen overnight, or easily for that matter. European antitrust regulators will need to scrutinize the deal to ensure competition isn't being squeezed.

In March 2011, after AT&T's acquisition with T-Mobile USA was shot down by the U.S. Justice Department on antitrust grounds. A proposed $39 billion takeover of the fourth largest wireless carrier raised eyebrows in Washington D.C., and the government was quick to kill off the deal.

Both the EU and U.S. authorities speak to each other on a regular basis in regards to antitrust concerns — even  if the two don't always see eye to eye  — the EU may take on board the Justice Department's notes from the AT&T-T-Mobile case and apply it on its side of the pond.