Study: NSA Could Cost U.S. Companies Billions

A loss of foreign customers could dig into revenue for U.S. tech firms.

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The National Security Agency has already cost taxpayers billions, but a new study says it could cost U.S. companies billions, too.
The National Security Agency has already cost taxpayers billions, but a new study says it could cost U.S. companies billions, too.

A study published this week by the Information Technology & Innovation Foundation finds that the U.S. cloud computing industry may lose between $21.5 and $35 billion in projected revenue during the next three years because of the exposure of secret NSA Internet-monitoring programs.

The NSA's PRISM program, the study says, "may fundamentally alter the market dynamics" and scare off foreign customers who wish to preserve their privacy.

To calculate potential losses to U.S. companies study author Daniel Castro compared market research firm Gartner's projections on industry growth against an estimated 10 to 20 percent loss in foreign market share for U.S. companies in 2014, 2015 and 2016.

(Courtesy of the Information Technology & Innovation Foundation)

The assumed potential losses are based on a June-July Cloud Security Alliance survey of 500 members that found 10 percent of non-American respondents cancelled projects with U.S. cloud providers, and 56 percent said they were likely to reduce use of cloud service companies based in the U.S.

"The survey was by no means scientific, but there's not a lot of data out there," Castro said.

Anecdotal evidence, the study says, points to the truth of possible consequences for U.S. firms. Swiss cloud-hosting firm Artmotion, the International Business Times reported July 4, experienced a 45 percent revenue bump after Snowden's revelations.

(Courtesy of the Information Technology & Innovation Foundation)

"My assumption here is the biggest risk is U.S. firms losing foreign customers," Castro told U.S News.

American cloud services include popular document-hosting options offered by Google and Microsoft - companies that collaborated with the NSA's PRISM program, according to a classified slideshow published by the Guardian - as well as Amazon and firms that market more specialized products.

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