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US Tech Companies Expected To Lose More Than $35 Billion Over NSA Spying 236

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

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  • by Anonymous Coward on Tuesday June 09, 2015 @08:59AM (#49874707)

    Should be a great improvement for gun sales though.

  • by 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.

    • To be fair, in at least one case the NSA intercepted [arstechnica.com] 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?
  • by vikingpower ( 768921 ) on Tuesday June 09, 2015 @09:02AM (#49874729) Homepage Journal

    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 ?

    • by gstoddart ( 321705 ) on Tuesday June 09, 2015 @09:10AM (#49874785) Homepage

      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.

      • WTF? Why is this modded troll?

        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.

        What is interesting is that industry is also co-opting the government (see the TPP negotiations), in a perverse mockery.

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

        Indeed, live by the free market and die by it. Turns out of be

        • by rtb61 ( 674572 )

          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

          • 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 craz

          • by tnk1 ( 899206 )

            You really think some US government drone wastes time moderating things on Slashdot?

            Yes, they probably index the comments for future reference via automation, but moderate? Not fucking likely.

          • by HiThere ( 15173 )

            I'm not sure you're right, though it's certainly possible. It's also possible that the current owner of the site has some default opinions that are automatically emplaced. Certainly, though, there are plenty of astroturfers on various topics. There's little evidence that it's even often the government. This, of course, doesn't mean that it isn't. It merely means that it's an unnecessary hypothesis.

        • by Rakarra ( 112805 )

          WTF? Why is this modded troll?

          My guess is because the line "you [Americans] are petty fascists who demand the world bends over for your security" is a pretty trollish line. It's hyperbole and unnecessary.

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

        • by HiThere ( 15173 )

          Depends. If you are a company doing business with your government, you buy locally. If you want to be secure from your government, you buy as foreign as possible, i.e. from a company in an area controlled by a government that has as little interaction locally (to you) as possible. And you still can't trust it, because the shipment could have been intercepted during importation.

    • 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.

    • Because if the spying was still secret people wouldn't know about it and hence wouldn't be taking measures to try and avoid some of it. It's not still secret because of Snowden's whistleblowing.

      There's a long history of government assisted industrial espionage (from all sides), so even if you aren't doing anything wrong at all knowing that everything involved in your dealings with US companies ends up in the hands of the US government and then potentially in the hands of your US competitors is a good motiva

      • by tnk1 ( 899206 )

        Oddly enough, by moving out of the US, the US is probably a lot more effective at spying on them. When you're in another country, you stop being even marginally protected by US privacy laws. Now, your operations are in the legitimate intelligence gathering territory of the CIA, and amusingly, the NSA.

        • You're already outside the US, so no that doesn't apply in the slightest.

          The topic is foreign customers choosing non-US providers because they know that any data US providers touch is handed over to the NSA.

    • I would imagine that they mean people wouldn't go out of their way to avoid spying if they weren't aware it existed. An ignorant population is like and animal with no natural predators, lacking the typical instincts required for self preservation.

    • You see, before we knew about the spying, the activity was in a superposition. We were both spying, and we weren't. Once Snowden leaked that information, the possible states collapsed to one -- spying -- and therefore Snowden is in fact directly responsible for both the spying and all of the fallout.

    • by gweihir ( 88907 )

      He cannot. The only thing a whistle-blower can do is make others aware of nefarious activity a little earlier. The NSA has cost the US a lot of business (probably far more than said 35 Billion) before Snowden.

  • This is a really unfortunate, yet predictable, fallout from the revelations that the tinhatters were right about some things after all.

    But. Unless we develop into a World where each nation makes all of their own tech, which seems unlikely, somebody, somewhere else, will still be using exported tech as surveillance machinery.

    It just won't be the US as much.

  • by Qbertino ( 265505 ) <moiraNO@SPAMmodparlor.com> on Tuesday June 09, 2015 @09:11AM (#49874791)

    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.

    • Pardon me, I tried searching, but couldn't find anything obvious. What is a "Type A Agency?"

    • by TrimTabTim ( 2671411 ) on Tuesday June 09, 2015 @09:49AM (#49875065)
      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: (Score:2, Informative)

      by 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.

    • by StikyPad ( 445176 ) on Tuesday June 09, 2015 @04:24PM (#49878743) Homepage

      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!

  • by Thruen ( 753567 ) on Tuesday June 09, 2015 @09:15AM (#49874827)

    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.

    • by serviscope_minor ( 664417 ) on Tuesday June 09, 2015 @09:35AM (#49874983) Journal

      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.

      • Do you blame the meteorologist when you don't like the weather? Do you blame the dealer when you don't like the cards? People are illogical that way.

    • 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.

      • "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".

        • by jfengel ( 409917 )

          In a slightly different formulation, Shakespeare:

          Is your man secret? Did you ne'er hear say,
          Two may keep counsel, putting one away?

          The Nurse, from Romeo and Juliet, and clearly citing it as an existing cliche.

    • 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.

    • by meta-monkey ( 321000 ) on Tuesday June 09, 2015 @10:08AM (#49875223) Journal

      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.

      • 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.

    • 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

      Everyone knew about the spying even before Snowdens leaks. Spies spy. This is not news. With the patriotism that seems to plague the USA, it is not a big stretch of the imagination to see how the secret police influences the industry. Closed source can't easily be audited, and every engineer knows how easy it is to hide backdoors in gadgets. Comms equipment standards (public, international ones) even mandate "lawful intercept" capabilities. Why would the secret police not utilize these, in secret? That they

    • This kind of sounds like FIFA and the FBI. If it wasn't for the FBI sniffing around and uncovering poorly covered secrets FIFA wouldn't look so shameful. If it wasn't for the FBI FIFA wouldn't now be poised to go bankrupt from lawsuits. What's wrong with the status quo people? Come on people. Seriously...
  • by FreeUser ( 11483 ) on Tuesday June 09, 2015 @09:17AM (#49874857)

    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.

    • If by smackdown they deserve, you mean: The phone company who we cannot sue, holds the metadata they'd been giving to the NSA prior to this. Now that is legally encoded in law, not an Act with a sunset clause. Not much changed... yet, except for making their collection mostly legal.

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

      Unfortunately, the tech companies that didn't cooperate with the NSA are getting it, too.

    • 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 J

  • The losses won't stop until either the clients have confidence in their ability to secure the systems or the NSA learns boundaries.

    The companies can't afford to blow this off. They are losing too much money to not resolve the issue.

    • by HiThere ( 15173 )

      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 somethin

  • by overshoot ( 39700 ) on Tuesday June 09, 2015 @09:23AM (#49874907)

    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.

  • While some international sales have taken a hit, keep in mind that there are plenty of domestic companies serving the anti-terror space that have sprung up and are employing Americans. http://rectasecurity.com/ [rectasecurity.com] as an example.
  • How else are they going to pay zero taxes?
  • TFA quotes this estimate to Information Technology and Innovation Foundation (ITIF). This is not a source that I would trust to give estimates on the amount of US business lost due to public knowledge of NSA industrial espionage.

    Another publicly available and reliable source of attributing business losses to external factors already exists: public company 10-K reports, including the Risk Factors section and the MD&A section.

    Although there may be a bandwagon effect, or a "bath" effect which may cause ove

  • by tekrat ( 242117 ) on Tuesday June 09, 2015 @10:06AM (#49875199) Homepage Journal

    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.

  • Is it time for a class action lawsuit against the NSA? Clearly their actions (as well-intentioned as they may have been) have caused significant, long-lasting damage. Maybe Snowden can join in - it seems his life has been somewhat affected too.

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

      Politicians do heaps of really stupid stuff, without sovereign immunity, countries would have been sued into bankruptcy centuries ago.
  • Pro NSA article (Score:5, Insightful)

    by EmperorOfCanada ( 1332175 ) on Tuesday June 09, 2015 @10:22AM (#49875347)
    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.
  • As the financial damage continues climbing, perhaps those companies who collude with the US Government will use this as a learning opportunity for future decisions. Assuming the impacted companies ultimately survive that is. I would personally rather see those who colluded with the Government on this go down in the flames of bankruptcy because trust, once lost, is never fully regained.

    If I were the shareholders, I would absolutely eviscerate them for risking not only the company, but the entire industry

  • All of those listed are companies that were already in trouble. Now, they want to blame the NSA for a good chunk of their ineptness.
  • TPP - no thanks. (Score:4, Insightful)

    by LQ ( 188043 ) on Tuesday June 09, 2015 @12:20PM (#49876427)
    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.

Marvelous! The super-user's going to boot me! What a finely tuned response to the situation!

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