Report: Government surveillance costs U.S. tech companies billions

"In short, foreign customers are shunning U.S. companies."
By Andrew V. Pestano  |  June 10, 2015 at 7:23 AM
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WASHINGTON, June 10 (UPI) -- The competitiveness of the U.S. technology sector has been harmed by the "pervasive" use of government surveillance and the ineffective debate surrounding it, according to a new report.

The Information Technology & Innovation Foundation estimated in 2013 that U.S. companies' foreign market share for cloud computing could drop because of U.S. surveillance concerns following the revelations by former National Security Agency contractor Edward Snowden.

The organization's "Beyond the USA Freedom Act: How U.S. Surveillance Still Subverts U.S. Competitiveness" report released Tuesday states it underestimated the damage of the effects of government surveillance on U.S. tech companies.

The organization previously estimated a drop of between $21.5 billion and $35 billion by 2016.

"Since then, it has become clear that the U.S. tech industry as a whole, not just the cloud computing sector, has underperformed as a result of the Snowden revelations," according to the report. "Therefore, the economic impact of U.S. surveillance practices will likely far exceed ITIF's initial $35 billion estimate."

NSA digital surveillance programs have led foreign customers to "shun U.S. companies" and even allowed foreign governments, including China, to use the fear of digital surveillance to force companies to relinquish valuable intellectual property.

"In the short term, U.S. companies lose out on contracts, and over the long term, other countries create protectionist policies that lock U.S. businesses out of foreign markets," the report states. "A failure to sufficiently reform U.S. surveillance policies is hurting U.S. technology companies, costing American jobs, and weakening the U.S. trade balance."

The organization urges the government to address other controversial digital surveillance activities by its agencies and released a list of recommendations:

• Increase transparency about U.S. surveillance activities at home and abroad. • Strengthen information security by opposing any government efforts to introduce back doors in software or weaken encryption. • Strengthen U.S. mutual legal assistance treaties (MLATs). • Work to establish international legal standards for government access to data. • Complete trade agreements like the Trans Pacific Partnership that ban digital protectionism, and pressure nations that seek to erect protectionist barriers to abandon those efforts.

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