US Tech Companies Expected To Lose More Than $35 Billion Over NSA Spying

Patrick O'Neill writes: Citing significant sales hits taken by big American firms like Apple, Intel, Microsoft, Cisco, Salesforce, Qualcomm, IBM, and Hewlett-Packard, a new report says losses by U.S. tech companies as a result of NSA spying and Snowden's whistleblowing "will likely far exceed" $35 billion. Previously, the Information Technology and Innovation Foundation put the estimate lower when it predicted the losses would be felt mostly in the cloud industry. The consequences are being felt more widely and deeply than previously thought, however, so the number keeps rising.

Comments

Other industries

[Anonymous Coward]

Should be a great improvement for gun sales though.

Re:Other industries

[PopeRatzo]

Well it's about the concept of rebelling against the government if they become too powerful.

I can appreciate the sentiment, but I've got to tell you, I'm not hopeful.

http://legalinsurrection.com/w...

http://ammoland.com/wp-content...

Well... Stop the Collusion...

[Anonymous Coward]

If they weren't in Collusion with the US Government, and were the SEPARATE entities that they are SUPPOSED to be, they wouldn't have this problem.

This is PEOPLE voting with DOLLARS.

If you want to do illegal things, we WILL STOP BUYING YOUR PRODUCTS!

Period.

Re:Well... Stop the Collusion...

[pixelpusher220]

To be fair, in at least one case the NSA intercepted a Cisco router in transit and modified it. Even took pictures of the work (with obligatory obscuring of faces) but they didn't obscure the big bold CISCO logo on the box.

How do you think that made Cisco customers feel?

Disagree with stupid wording

[vikingpower]

as a result of NSA spying and Snowden's whistleblowing

Could anyone give us a sensible and argumented answer as to how a mere whistleblower's can cost the US economy that kind of money ?

Re:Disagree with stupid wording

[gstoddart]

Because before people realized the extent to which the US government was co-opting industry to be part of the spy apparatus, people had no real understanding of the issue.

Since every US firm is covered under the Patriot Act which says "we can demand your data in secret", now that we know just how untrustworthy US firms are, buying from US firms is idiotic because it's patently obvious there can be no trust.

Snowden didn't cause this, per se, but if he hadn't made it so damned plain that the US government and US firms can't be trusted, then people would still be oblivious, and the NSA could spy in secret.

Honestly, I think US firms deserve to lose truckloads of money as they're no longer welcome to try for certain kinds of business.

Because hitting America in the pocketbook seems to be the only way to affect change.

But make no mistake, on a global scale, the US and all US industry are no longer trustworthy entities. And we no longer buy your narrative about the defenders of liberty, democracy, and freedom ... you're petty fascists who demand the world bends over for your security.

We don't give a damn about your security if it means giving up our rights. In fact, if it means giving up our rights, the world is increasingly saying "fuck your security".

So, boo hoo, people will stop buying your products. That's your problem.

Re:Disagree with stupid wording

[Njorthbiatr]

Because you need someone to blame.

That's how this works. I do the illegal stuff, the guy who calls me out on it takes the fall.

Re:Disagree with stupid wording

[rtb61]

You will find stuff that is initially modded against the majority preference, it was modded by professionals. Professionals from specific US government agencies and well as major PR firms. Problem is their numbers are lacking, so that their initial influence is soon over come. They also lead often lead off with early off topic comments to fill the first page of comments with empty waffle. This is why they were looking to use software to flood every possible forum with computer generated comments, millions of them, destroying forums they did not like and only leaving forums the contained their computer generated comments only. A vast criminal enterprise as it specifically intends to interfere with an essential part of the democratic process, the exchange of opinions, information and ideas between citizens.

Re:Disagree with stupid wording

[gstoddart]

Bah, I think you ascribe far too much organization to the moderation on Slashdot.

There just tends to be a bunch of polarizing issues, and there's always going to be people who reflexively are either for or against something -- many of them will never think about that position, some will hold those positions to be contrary and loud on the intertubes.

You say "A vast criminal enterprise as it specifically intends to interfere with an essential part of the democratic process" ... I say there's all sorts of crazy on the intertubes, and always will be. it doesn't need to be some grand conspiracy.

Slashdot isn't influential enough for someone to have an organized campaign against anything -- or an organized anything for that matter.

Slashdot just has a bunch of crazy pulling in multiple directions at any given time.

Re:ABC Anywhere But China

[johanw]

If I have to choose I would prefer China spying on me than the US. China doesn't care wether I download movies and music, or if I want to smoke something else than tobacco. The US can have me extradicted and put me in jail for made up charges, China much, much less likely.

The NSA fallout here is astonishing

[Qbertino]

The NSA fallout here is astonishing. We're a Type A Agency with me as prime IT guy/consultant for everything and a half-assed Wordpress Pipeline for web projects. We don't do big things but we do quite a few as Agency Project spinnoffs and sideprojects. What strikes me is how many customers specifically ask for hosting on German soil, Google-free tracking and such - even for projects where it shouldn't matter that much. The point is, they don't want to make them selves vulnerable in case of a data-breach. Germany privacy laws are pissy like that.

Bottom line:
The negative press the US IT industry has gotten with NSA and such has a measurable impact - I myself am surprised.

Re:The NSA fallout here is astonishing

[TrimTabTim]

As another in Germany responsible for IT stuff, i can second the fact that we avoid US software, hardware and services at every chance.

Sorry US tech firms: your Industrial Military Complex has fucked you. Go fuck it back and recover your civic freedom while ending your contrived wars.

We might then start trusting you again, but until then, we're doing fine without US products. This oddly US idea that it is at the centre of the universe is delusional. Despite the best efforts of US foreign policy, we're still doing fine out here in the rest of the planet where the majority of humanity lives.

Re:The NSA fallout here is astonishing

[Anonymous Coward]

Ditto. I work in IT for a small-ish Non-US multinational ( 10k employees) and our direction is to reduce with the goal of eliminating all US vendors org-wide. It's currently impossible obviously but that's the direction from the C-levels so we do what we can.

I'm not surprised to hear we're not the only ones.

Re:The NSA fallout here is astonishing

[HiThere]

No. Read your history. Actually the US has been remarkably peaceful for a dominant world power. Compare it to Imperial Rome or Alexandrian Greece or the Persian Empire. I suspect that this is because wars are no longer profitable. Trade driven empires were rare in ancient times, Egypt is the only one I can think of. (Sorry, I don't know enough Chinese or Indian history to include them in this summary.) But this US "empire" is more similar the the Egyptian empire than even the the British Empire. And the British Empire was peaceful compared to it's predecessors (though wars were still slightly profitable up until around WWI).

My hope is that the sucessor to the US will be even more trade driven that is the US "empire". But that *is* only a hope, and would be quite unusual historically. OTOH, wars are now much more costly and less rewarding that they have ever before been.

Re:The NSA fallout here is astonishing

[StikyPad]

But can you really put a price on safety? All of this spying has made us incredibly safe, as evidenced by steep decline in terrorism-related deaths in the US since 2001, zero of which have been from hijacked airplanes. I mean, sure, more people in the US died from malnutrition in 2001 (and every year since) than from 9/11 attacks, but starvation in America is hardly a problem we can solve by just throwing hundreds of billions of fucking dollars at the way we can with terrorism.

And yes, many, many other countries have been affected by terrorism without getting sucked into a perpetual war in a variety of countries that may or may not have had anything to do with the attacks or creating a power vacuum for ISIS to fill, but those aren't the best, most exceptional countries in the world, are they? Probably French or European countries. Light on a hill, American exceptionalism, Stikypad for President 2016, y'all!

Re:The NSA fallout here is astonishing

[ultranova]

Maybe we should have been neutral like Switzerland in 1941 - and ever since.

You were, until Japan attacked Pearl Harbor and Germany declared war on you.

Re:ABC Anywhere But China

[bev_tech_rob]

If I have to choose I would prefer China spying on me than the US. China doesn't care wether I download movies and music, or if I want to smoke something else than tobacco. The US can have me extradicted and put me in jail for made up charges, China much, much less likely.

No, they may not care about you downloading movies or music, but bad-mouth the Chinese Premier or say something bad about the Chinese government and they can kick in your door at any time and make you disappear when they feel like it.

"Result of... Snowden's whistleblowing"?

[Thruen]

as a result of NSA spying and Snowden's whistleblowing

Also, FTA:

The actual losses "will likely far exceed $35 billion," according to the ITIF report, because the entire American tech industry has performed worse than expected as a result of the Snowden leaks.

Serious question. Does the leak actually count as part of the cause? I know if everything were still under wraps the spying might not have cost tech companies anything in lost sales, but it seems unfair to suggest that Snowden is partly responsible for the consequences of what he revealed simply because the consequences MIGHT have been avoided or at least delayed if he hadn't revealed it. I might just be making something out of nothing, it just seems like a dick move to act like it's his fault the way some people make it out to be. Not that it's anything new, but it was almost excusable when this was fresh and people still didn't fully understand the situation, now we've all had enough time to take it in and figure out who the real bad guys are.

Re:"Result of... Snowden's whistleblowing"?

[serviscope_minor]

Does the leak actually count as part of the cause?

That depends. Do you blame the police for reducing the GDP when the bust some large drugs operation?

My take is no. They were doing bad stuff and got caught red handed. The fault lies entirely with those doing bad stuff not with those who caught them at it.

Re:"Result of... Snowden's whistleblowing"?

[Feral Nerd]

Does the leak actually count as part of the cause?

I was thinking the same thing, Snowden is more of an inevitable effect. There was no way they were going to keep a lid on an operation like this forever. It was never aquestion of whether, it was always only a question of when the scab would break open up and the pus would come flowing out.

Re:"Result of... Snowden's whistleblowing"?

[nedlohs]

Of course it is.

Just like the video of a police officer shooting a unarmed (slowly) fleeing man should be blamed for all the resulting community uproar and unrest. After all there wasn't any uproar over the initial media reports of the incident full of all claims for such shooting ("I feared for my life", "he went for my weapon", etc).

With no whistleblowing there would be no problem. With no video there would be just another dead criminal and a another heroic officer getting a bravery award.

Re:"Result of... Snowden's whistleblowing"?

[meta-monkey]

Depends on the words you use and the context. "Caused" can be free of value judgment. "Responsible" generally implies taking ownership of consequences. "Blame" usually implies culpability for negative consequences.

If you want to talk about assigning blame, we could look at it like a criminal case, from a common law standpoint. It's not a criminal case, as it's not (currently) a crime to cause corporations to lose profits (although I'm sure that day is coming). But, common law is a reasonable structure by which to assign blame, perhaps? I don't know much about civil law, but I read a lot about criminal law, so I'll use those terms.

I would say that yes, Snowden's revelations were "cause in fact" for the harm to profits. If he had not acted, the profits would not have been lost, regardless of the fact that he didn't create the spying situation in the first place. Someone else may have acted later, sure, but that's immaterial. If he didn't act, profits would not have been lost. Now if you look at "proximate cause," how likely it would have been that his action of revealing the spying would have caused the loss in profits, I'd say "moderately."

But that's the "actus rea" part. How about culpability? What did he intend? He intended to reveal spying, with the intention that this revelation would end the spying. If the spying ended, there would be no loss of profits. If the government had instead acted swiftly and said "whoa, this is bullshit, knock that off!" business might see that as a positive sign, even, that while yes, no one can 100% prevent bad actors, it's reassuring that bad action is corrected when discovered. Profits could have even gone up, with businesses taking faith the US government will act in their interests. Instead the government compounded the bad actions.

So I'd say that puts the culpability for the lost profits on the government, and not on Snowden. He didn't intend that profits be lost, and profits would not have been lost if the government did not continue bad action. I don't see how you can hold Snowden responsible for the decisions the government made after the revelations. While "one should know" that the government wouldn't stop, you can't be held responsible for "negligently" expecting another party to not act wrongly. Even if you could, "justification" is a defense for almost all actions. "Yes I did something that would be wrong on the face of it but it was the right thing to do so there's no crime." It's up to others to determine if your justification is valid or bullshit, of course. Legally in this case that doesn't fly because the Espionage Act prevents one from using a justification defense (which is why anybody saying "Snowden should come back and stand trial and explain what he did and let a jury decide!" is wrong. He is legally not allowed to defend his actions as justified). But from a common law standpoint, he is arguing that he was justified in revealing the information because it would have been wrong not to.

So all around, "partially caused?" Yes. "Responsible for?" No.

That was a rambling bunch of nonsense, but there you go.

Re:"Result of... Snowden's whistleblowing"?

[drinkypoo]

I would say that yes, Snowden's revelations were "cause in fact" for the harm to profits. If he had not acted, the profits would not have been lost,

If the NSA had not acted illegally, the profits would not have been lost. Someone could have disclosed this information accidentally and then we'd have been in the same place.

Stop blaming messengers.

Re:"Result of... Snowden's whistleblowing"?

[RabidReindeer]

"Three men can keep a secret if two of them are dead".

Benjamin Franklin, old Russian proverb, I dunno.

Snowden determined the "when" more that the "what".

US Industry betrayed a relationship of trust

[FreeUser]

US Industry (Cisco et al) betrayed a basic position of trust. They did so when they helped facilitate the Great Firewall of China and assisted the Chinese government in imprisoning dissidents. Hell, they did when obese captains of industry were on TV signing accords with Chinese politicians days after the Tiananmen Square massacre.

However, facilitating the NSA's indiscriminate violation of everybody's privacy worldwide was a step too far for just about everyone, and now they are getting the smackdown they so richly deserve after decades of betraying our most basic, sacred constitutional principles.

In short, fuck every tech company who cooperated with the NSA. You haven't even begun to get what you deserve.

Re:US Industry betrayed a relationship of trust

[Nethemas the Great]

Setting other injustice aside. In many cases of cooperative spying, US tech companies had no means by which to refuse. They were legally compelled to comply. They were legally compelled to shut up. While it would have been an amazing act of courage, and rebellion, Apple, Google, etc. surely were not going to burn their businesses to the ground just to poke the spooks in the eye. Only a handful willingly volunteered to snoop such as Verizon, AT&T (if memory serves).

In many cases such as Cisco, and Juniper, the NSA and co were intercepting shipments of hardware to customers and modifying them. Google was victim of NSA man-in-the-middle attacks.

The power brokers in the military industrial complex need the slap down.

Slight edit for mainstream consumption

[overshoot]

a new report says losses by U.S. tech companies as a result of NSA spying and Snowden's whistleblowing "will likely far exceed" $35 billion.

Italicized text to be deleted for use in mainstream news reports.

Re:ABC Anywhere But China

[overshoot]

Key difference: the Chinese don't, generally speaking, have the power to kick in my door here in the USA (or for that matter in most places outside of China). The USA has, on the other hand, demonstrated both the ability and willingness to vanish people to "black sites" without any regard for what most people would recognize as due process.

Re:Americans are not the only ones loosing money..

[mujadaddy]

have halted

Citation, please? What has stopped?

Re:ABC Anywhere But China

[silas_moeckel]

They can do that in china not so much the rest of the world. So for most there is little fear from the Chinese government. Primary issue would be industrial spying.

Re: ABC Anywhere But China

[DigiShaman]

No, no you really don't want the Chinese spying on you. I had my GMail account hacked when I was last in Shanghai. I suspect a MITM attack via the default port 443 traffic from my iPhone. I didn't log into any website or use a PC; and my password is really complex and lengthy with a mix of numbers, special characters, and capitalization.

And this was GOOGLE!!! Anything else secure is a cakewalk to hack for them.

Re:Profits?

[Feral Nerd]

I haven't seen any estimates on the benefits/profits to US (tech) companies from the industrial espionage part of the NSA spying published anywhere? Would anyone have a number or a link to a source?

Just trying to get some perspective here.

There was a report issued by the European Parliament some years ago about how the NSA used the Echelon system on behalf of US corporations to spy on their competitors. That report cited somel successful NSA industrial espionage operations but it is a bit dated now. Back then the conclusion was that any company that did not switch all of its communications to encrypted tech and didn't hire security consultants was basically asking the NSA to hand its trade secrets to American competitors (and I'm sure the same applies to US companies vis a vis Russian/Chinese/European competitors). Of course very few people listened back then. I'll be disappointed if the NSA hasn't taken their industrial espionage operation to the next level since then. I keep hoping the the European Parliament will issue an updated second edition of this report.

And not a single lawsuit was filed.

[tekrat]

If you're a person and you download a song, the FBI breaks down your door, confiscates your computer, and the prosecutor will haunt you until you commit suicide because he's talking millions in fines and decades of prison.....

But the NSA can cause $35 Billion in damage making copies of everyone's data (including songs); and not a peep from anyone.

You'd think a company hard-hit, yet with deep pockets (Oracle?); and an ego-manical CEO, would bring a lawsuit against the NSA for the damages.

But no. Apparently when you're the 800-pound gorilla, you can basically ignore the rule of law. The NSA could be shooting citizens in the head live on national TV and nobody would do anything.

Pro NSA article

[EmperorOfCanada]

This article doesn't argue for curtailing the NSA to benefit US businesses but in promoting these crazy trade agreements to make it illegal for other countries to avoid the NSA. The idea being that if people can't just avoid US companies to avoid the NSA then these other countries will have no competitive advantage.

I generally hated the proposed trade agreements but now I despise them.

Plus I am seeing highly promoted links to this article all over the web. I saw multiple attempts to get this on reddit when finally their army of shill voters managed to get it to the front page.

Re:ABC Anywhere But China

[Anonymous Coward]

-And you don't have to be a terror suspect for this to be the case either. See: Kalief Browder.

http://www.newyorker.com/news/news-desk/kalief-browder-1993-2015

Re:Is It Time for Class Action?

[niftydude]

Unfortunately, you can't sue governments for the stupid stuff that they do, as they have sovereign immunity.

Politicians do heaps of really stupid stuff, without sovereign immunity, countries would have been sued into bankruptcy centuries ago.

Re:Cost-Benefit

[ranton]

Honest question. What is the "theoretical" benefit from the NSA spying? The U.S. gave up $35Bn (and, frankly, specific companies had the brunt of it), but is there "savings" because of our security?

I'm not trying to get into a political discussion of "NSA is over-stepping its bounds." I also realize that the "savings" is entirely implicit. But I do wonder if there are some other, immeasurable, benefits of the agency.

First off I am not defending the NSA's actions; I am just trying to give an honest answer to this question.

Since the stated goal is to protect America from attacks, looking at the financial costs of the 9/11 attacks is a good way to find the costs on the other side of the argument. According to the New York Times, the successful attacks on the World Trade Center had an immediate economic cost of $178 billion. This includes $24 billion for the value of life lost, using similar actuarial tables that insurance companies or wrongful death lawsuits would.

The $35 billion figure is over a 4 year period, so thats about $9 billion per year. With this reasoning, if the NSA PRISM program could prevent one 9/11 scale attack every 20 years, it could be argued that it is worth it. This does not count the actual cost of running the NSA operation though, but that allegedly only cost about $20 million so it barely factors in.

If you accept the argument that war is inevitable when the US is attacked like we were on 9/11, then the total cost of 9/11 could be closer to $3 trillion. If American was safe enough because of NSA spying that it didn't "need" to fight foreign wars, that would be a huge economic cost saver.

This obviously does not factor in the cost of our loss of freedom, but I am trying to play devil's advocate here.

Re:Freedom has a cost

[RabidReindeer]

I, for one, appreciate that it takes money to protect my freedom from terrorists. I have nothing to hide

And innocent people have nothing to fear.

Hey, guess what. YOU don't get to determine what's "innocent".

Back in the 1800s, Heroin was a commercial product, cocaine was legal and you could stockpile weed without ending up in prison. These days, buying fertilizer can get you in trouble. For decades, alcohol was illegal There is virtually nothing so innocuous that some group cannot get all worked up about and make illegal and suddenly all your records about your little hobby can be used to put you away. Not just the obvious vices, but things like photography, home vegetables, choir practice and more.

TPP - no thanks.

[LQ]

Their last recommendation - 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 - is a reminder why Europeans do not want the TPP enacted. There's a big difference between protectionism and now wanting to hand all you private data over to the NSA. The TPP basically enforces lower US standards of business on Europe where there's more red tape to protect small companies and consumers.

Re:ABC Anywhere But China

[Zontar_Thing_From_Ve]

If I have to choose I would prefer China spying on me than the US. China doesn't care wether I download movies and music, or if I want to smoke something else than tobacco. The US can have me extradicted and put me in jail for made up charges, China much, much less likely.

My last 2 girlfriends were born and raised in China and both would argue vehemently with you about this. Search sometime for photos on the internet of houses in the middle of roads in China. Do you know why those houses are there? It's because some Communist Party official wanted a road built and an owner refused to sell for literally pennies on the dollar (offers to buy may be at 10% of true value) so they built the road completely around the house to force the owner to leave for nothing. One of my ex-girlfriends still spoke angrily about how the police interrogated her and her school friends harshly over a decade ago because they happened to be dormmates with a girl who was secretly in Falun Gong. Do you know why the Chinese government persecutes Falun Gong? Nobody in the West does. There's speculation that it may be nothing more than a loyalty test of Communist Party members -it serves no purpose other than to see if Party members will go along with it and thus be loyal. Neither of my ex-girlfriends thought very much of the Chinese government and both thought that while the US and other Western democracies might not be perfect, they were a lot better choice than China.

Alternative?

[Tablizer]

But what country that manufactures such equipment is likely free of similar problems? Where are the customers going instead?

Re:And counting...

[HiThere]

The question is, how could they possibly restore trust?

They had trust, the secretly betrayed it, using techniques that were not evident. So if they reform, how do you know that they've actually reformed rather than just changed their techniques?

And for that matter, there is plain evidence of shipments being intercepted and altered without the manufacturers knowledge. So you also need to verifiably reform the methods of shipping. How do you verify their security? The only thing I can think of is something analogous to key signing for hardware, but I can see no way to implement that.

So you say "they need to resolve this issue", and I agree that the need is present, but I don't see a possible mechanism.