A congressional committee’s effective blacklisting of Huawei Technologies Co.’s products from the U.S. telecommunications market over allegations they can enable Chinese spying may come back to bite Silicon Valley.
Reports that the National Security Agency persuaded some U.S. technology companies to build so-called backdoors into security products, networks and devices to allow easier surveillance are similar to how the House Intelligence Committee described the threat posed by China through Huawei.
This concern over back-door NSA spying in U.S. technology may make a huge impact on the United States technology industry:
Just as the Shenzhen, China-based Huawei lost business after the report urged U.S. companies not to use its equipment, the NSA disclosures may reduce U.S. technology sales overseas by as much as $180 billion, or 25 percent of information technology services, by 2016, according to Forrester ResearchInc., a research group in Cambridge, Massachusetts.
“The National Security Agency will kill the U.S. technology industry singlehandedly,” Rob Enderle, a technology analyst inSan Jose, California, said in an interview. “These companies may be just dealing with the difficulty in meeting our numbers through the end of the decade.”
The economic backlash isn’t just theoretical. Several governments are already in the process of banning U.S. backed services.
Germany’s government has called for home-grown Internet and e-mail companies. Brazil is analyzing whether privacy laws were violated by foreign companies. India may ban e-mail services from Google Inc. and Yahoo Inc., the Wall Street Journal reported. In June, China Daily labeled U.S. companies, including Cisco, a “terrible security threat.”
It’s yet another revelation in the “summer of Snowden leaks” that’s making life difficult for American businesses. Princeton technologist Ed Felten — who used to be government-employed at the Federal Trade Commission — writes, “This is going to put U.S. companies at a competitive disadvantage, because people will believe that U.S. companies lack the ability to protect their customers—and people will suspect that U.S. companies may feel compelled to lie to their customers about security.”
“I can’t imagine foreign buyers trusting American products,” says security expert Bruce Schneier. “We have to assume companies have been co-opted, wittingly or unwittingly. If you were a company in Sweden, are you really going to want to buy American products?”
Hill continues, describing how “it’s not just experts and analysts” weighing in on the financial impact of NSA spying.
“This bodes ill for the US economy, as the rest of the world will turn its back on U.S. Internet companies,” says Phil Zimmermann, the author of Pretty Good Privacy — a form of encryption — and co-founder of Silent Circle, a company that offers secure text and chat. “The NSA policies will cause enormous collateral damage to our economy.”
Zimmermann says the encryption used by Silent Circle has not been cracked by the NSA. “If you do a good job on the design, like we did, the crypto will be safe,” he says. He notes that PGP was acquired bySymantec SYMC +0.16% in 2010, that all of his friends subsequently left the company, and that he doesn’t know who is taking care of it these days. “I think they still publish the source code, so it’s probably OK,” he says by email.
Meanwhile, Google, Yahoo and Facebook have all filed petitions with the government asking for the right to be more transparent about the requests for information they are getting from the intelligence community. Their argument is not that NSA activity itself is hurting their businesses but that the agency’s secrecy is leading them to be hung out to dry in the press as “misleading” articles get published.
Advocates for these technology companies are fighting back, detailed in an article in the Huffington Post and the Guardian by Dominic Rushe (“Melissa Mayer, Mark Zuckerberg sound off about NSA surveillance.”)
Mark Zuckerberg of Facebook and Marissa Mayer, the CEO of Yahoo, struck back on Wednesday at critics who have charged tech companies with doing too little to fight off NSA surveillance. Mayer said executives faced jail if they revealed government secrets.
Yahoo and Facebook, along with other tech firms, are pushing for the right to be allowed to publish the number of requests they receive from the spy agency. Companies are forbidden by law to disclose how much data they provide.
Perhaps in yet another twist of irony, Zuckerberg–whose own Facebook is no stranger to privacy concerns and criticisms–said that “the government had done a ‘bad job’ of balancing people’s privacy and its duty to protect.”
“Frankly I think the government blew it,” he said.
He said after the news broke in the Guardian and the Washington Post about Prism, the government surveillance programme that targets major internet companies: “The government response was, ‘Oh don’t worry, we’re not spying on any Americans.’ Oh, wonderful: that’s really helpful to companies trying to serve people around the world, and that’s really going to inspire confidence in American internet companies.”
“I thought that was really bad,” he said. Zuckerberg said Facebook and others were pushing successfully for more transparency. “We are not at the end of this. I wish that the government would be more proactive about communicating. We are not psyched that we had to sue in order to get this and we take it very seriously,” he said.