Report: Slow Surveillance Reform Has Cost U.S. Tech Companies Over $35 Billion

The Information Technology and Innovation Foundation (ITIF) group recently published a new report that said the U.S. tech companies have already lost $35 billion in sales due to the "failure of U.S. policymakers to address surveillance concerns" after the Snowden documents came out in 2013.

The surveillance revelations have made foreign governments worried that the American companies may also give their citizens' data too easily to U.S. law enforcement (PRISM, various "cyber-threat sharing" programs, etc). This has prompted certain countries to request American companies to keep the data on their own citizens in a local data center. For others, it has also been an excuse to have more local control over those companies as well as their citizens.

Either way, it seems all of this could have been avoided if the U.S. had stricter surveillance laws and policies and if U.S. companies were more concerned with encrypting their customers' communications and data in a way that even the companies themselves can't get it (end to end encryption).

Now, both the U.S. Congress and American companies must show just how committed they are to protecting that data against abusive surveillance before they lose even more contracts and revenue.

The ITIF group recommends the following measures to regain the trust in U.S. companies:

Increase transparency about U.S. surveillance activities both at home and abroad.Strengthen information security by opposing any government efforts to introduce backdoors 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.

The proposal about opposing efforts to introduce backdoors in U.S. technology is likely the most important one, because if foreigners find out U.S. technology has backdoors, then the revenue losses could grow at a much faster pace. It should go without saying that if U.S. products have U.S. government backdoors in them, then that won't inspire too much trust in American companies.

The U.S. government will need to take an opposite approach to encryption than it takes now. Although President Obama has said that he supports strong encryption, the FBI continues to ask for encryption backdoors in public, which only results with foreign customers trusting U.S. products even less. The U.S. government will need to be explicitly clear that it is against encryption backdoors.

The last one about the TPP agreement is probably the most controversial and is ultimately likely to be unnecessary if companies decided to protect their data in a way that even the U.S. government can't get it. In fact, that would be an even stronger measure than requiring companies to keep the data abroad, because that data can still be stolen by U.S. spy agencies if it's not protected properly. Geography, in this case, is less important than how the data itself is protected.

The ITIF group ended its report by urging U.S. policymakers to further reform surveillance laws beyond the recently passed "USA Freedom Act" in order to stop the decrease in trust in American companies and the wave of protectionist laws in other countries, which require tech companies to keep their citizens' data locally.

“If the U.S. tech industry is to remain the leader in the global marketplace, then the U.S. government will need to set a new course that balances economic interests with national security interests. The cost of inaction is not only short-term economic losses for U.S. companies, but a wave of protectionist policies that will systematically weaken U.S. technology competitiveness in years to come, with impacts on economic growth, jobs, trade balance, and national security through a weakened industrial base. Only by taking decisive steps to reform its digital surveillance activities will the U.S. government enable its tech industry to effectively compete in the global market."

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